Poolman Shares NAIC’s Ambitious Plans for Regulatory Modernization

North Dakota Commissioner Helps Agents Handle the Hard Market

During the National Association of Insurance Commissioners’ (NAIC) winter meeting in San Diego last December, Insurance Journal’s National Editor Andrea Ortega-Wells had the opportunity to chat with North Dakota Insurance Commissioner Jim Poolman. He had just been elected the NAIC’s vice president for 2004, and had previously served as chair of the group’s Midwestern zone.

Poolman, a Republican, was elected commissioner in 2000 after serving four terms in the North Dakota House of Representatives. The following is a transcript of their discussion, edited for clarity and brevity. You may watch the full interview online at www.insurancejournal.com/
video/1180_163_320x240_268k.wmv.

Insurance Journal: Can you tell us a little about your plans you have in place for 2004?

Commissioner Poolman: Certainly we’ve got an aggressive agenda ahead of us to modernize insurance regulation all over the country, which of course has to be done on a state-by-state basis. This year we implemented essentially a new commitment to action to modernize state regulation across the country. This next year is going to be an important year to make sure that state by state we’re getting those reforms done in the areas of producer licensing and speed to market and all the other areas that need reform to make sure we can keep a good solid base of state regulation of insurance.

So, we’re going to have an aggressive agenda and a busy year. We also have an agenda to keep active in Washington so members of the federal legislature know we’re making reforms at the state level and making the market as competitive as possible and making sure that we are responsible in responding to the marketplace by keeping up good and modern regulation.

IJ: I also know you’re chair of the NAIC’s Midwestern Zone committee. Can you tell us a little about the region and the issues in the Midwestern states and maybe some the issues you’re dealing with in that committee?

Poolman: Sure, we’ve been dealing with issues of credit scoring and what are essentially hard-market issues. Every state’s been hit with the hard insurance market, and small markets—and many states in the Midwestern zone are small-market states and may not have the same kind of competitive environment large states do. We’ve been working to attract new insurers, make sure we focus on insurer solvency but also on coordination of regulation in the Midwest zone. For example, on market conduct we’ve got a Midwest zone agreement so companies that do business in the Midwest zone don’t have several states doing market conduct at the same time. Also, in the area of continuing education for agents, we have formed a reciprocity agreement. If you get continuing ed in one state, it should be good in another state. And so we really thing that’s kind of a model that other states and other regions can use to make sure this patchwork system of regulation of ours is as seamless as possible.

IJ: Speaking of producer licensing, there definitely have been some efforts toward streamlining that. I know you’ve created a national database but there are still some states, while all have signed on, some still aren’t utilizing the database to its full capacity. What can you tell us about that?

Poolman: I also serve on the National Insurance Producer Registry (NIPR) board and we’ve taken very aggressive steps from to make sure we utilize the resources that the NIPR has to encourage states to do electronic resident and nonresident licensing to make sure we’re as efficient in licensing as possible. We literally have hundreds of thousands of agents out there. And so we’ve communicated about our resources, and on the other hand we’ve also reduced prices so that consumers and producers and companies who pay to utilize system can encourage states to get on and utilize the actual system itself. We’re doing as much as possible to encourage utilization of the system we’ve put in place.

IJ: You’re also one of the co-chairs of the Government Task Force. What are some of the activities that have been happening in that group over the course of the winter meeting?

Poolman: We have worked over course of this year with both the National Conference of State Legislatures (NCSL) and National Conference of Insurance Legislators (NCOIL) and both have passed resolutions in support of state regulations. We’re also working with members of Congress to educate them first of all about what insurance commissioners do and show the benefits of state regulation of insurance. We hope to continue that to educate members of Congress and the legislatures because as I tell people, “
We’re only as good as the legislation that’s passed that gives us the authority to regulate.” This is a true partnership with legislators at the state and federal levels to partner so they know what we’re doing and they understand the ramifications of the legislation they pass. We’ve got an aggressive agenda there too.

IJ: Market availability is obviously an important issue for independent agents and brokers. In your state what have you done to help agents with this crisis?

Poolman: We’ve done a couple of things. First of all, we’ve been out there making consumers know, essentially working hand in hand with independent agents in our state to first of all show that not all people are changing their policies in the same way, in terms of forms and deductibles but also in pricing. We’ve worked with companies to make sure they get adequate pricing.

I’ll give you a prime example. In 2001, the statewide average loss ratio for homeowners was 297 percent. That means insurers paid out three dollars for every dollar they took in premiums. That’s a crisis in North Dakota and we’ve been out there specifically educating consumers about why prices have gone up and about why forms and deductibles have changed, in conjunction with agents to make their jobs easier. Essentially, we’re an unbiased source of information and the more information we can get out to consumers, it makes the independent agents’ job easier because when they’re also getting out that message it’s reinforced by the commissioner who’s elected to do that.

IJ: In your state, informing consumers is an important priority. What have you done to help educate the consumer about issues surrounding credit scoring?

Poolman: First of all, before we did any legislation about credit scoring we held a public hearing. And one of things I think was important was allowing the public input on this. We’ve heard from independent agents too; we also do agent forums across the states to get feedback not only from consumers but agents. Then of course we introduced the NCOIL model act related to credit scoring. One of the problems we had in North Dakota was we could never get the information specifically related to the models the companies were using. Now we actually have the ability to look at that model and make sure the companies aren’t discriminating and there are consumer protections in place so we can reassure the agents that regulators have taken into account that companies are not discriminating against the consumer because we’ve had access to that information.

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