IJ Exclusive: Colorado Commissioner David Rivera Has Age-and Experience

When David Rivera was appointed Insurance Commissioner by Colorado Governor Bill Owens in April 2005, he was the youngest commissioner in the United States. Despite his age, however, Rivera already had a wealth of experience, having served as the governor’s former senior policy advisor and worked for the American Academy of Actuaries.

As head of the Colorado Division of Insurance within the Department of Regulatory Agencies, Rivera now licenses 93,000 insurance agents, licenses approximately 2,2000 foreign and domestic entities, monitors their financial solvency and market conduct activities, and responds to approximately 60,000 consumer inquiries annually, including 7,500 formal complaints. Insurance Journal was curious why someone so young would want to take on such a large task-and find out his plans for 2006.

Insurance Journal: You were appointed by Governor Owens, but you had been part of his administration for some time. What made you interested in the insurance commissioner position?

David Rivera: It seemed like the next natural next step. I started off with the American Academy of Actuaries. I worked there for seven years and was involved with insurance issues, plus coordinating retirement income policy issues. When I came out here [to Colorado], I worked with the American Heart Association and then continued with the Governor, primarily in healthcare, and I also worked on some auto insurance issues in the end. It seemed like then next natural step, and next good stop for me.

IJ: As the youngest insurance commissioner in the United States at the time, what challenges and advantages did you face?

Rivera: I never really thought of it as a challenge being the youngest. I had a lot of experience at age 34 when I was appointed. I had worked on insurance issues since I was 23, so I had a pretty good background. The challenge is always in the way people perceive you; some might doubt my experience because of my age. In those cases, and to everyone, I try to show through my actions that I have the experience necessary to do the job.

IJ: What role(s) have you assumed with the National Association of Insurance Commissioners?

Rivera: The winter meeting was the first meeting I had the opportunity to attend. I was appointed in late April 2005. My wife gave birth to our son about six months ago. That alone was life altering, so I didn’t have a chance to travel to that first meeting after I was appointed. I’m really sort of figuring out what committee roles I will have. My interest is primarily in healthcare and health insurance issues, and I hopefully will be able to increase my work in that area.

IJ: What are your priorities as commissioner?

Rivera: Looking at the big picture, it’s how we position the department and how we react to what’s happening in the insurance marketplace. When you look at the market, it’s becoming less paternalistic in terms of the employer who used to direct everything. We’re moving more toward a consumer-directed system. Colorado went from a prescriptive to no-fault auto insurance system, and now consumers have more choice under the new tort system. With the Medicare plan, we’re really seeing consumers with a lot of choice, and they have to make more decisions. The question we need to answer is how do we provide good information so consumers can make those decisions being informed?

IJ: How did you educate the industry and public about changes in the auto system?

Rivera: The main challenge, in terms of education, is the fact that medical payment coverage is not under auto insurance. Consumers need to ask if they have sufficient medical in private insurance so that if they get in an auto accident, they are covered. Our challenge was in educating consumers on what type of medical coverage is appropriate under the new system. There needed to be more emphasis on liability and making sure consumers have sufficient liability to protect their assets. Under Colorado law, you need $25,000 liability per accident. If you have $300,000 in assets, however, that $25,000 might not be sufficient.

Our role in educating consumers was telling them to take a look at liability coverage, medical coverage and uninsured motorist coverage, and understand all of that. It’s really a good thing that consumers have more options and government is less prescriptive, but it puts the responsibility on consumers now to make informed choices.

IJ: Are Coloradoans happier with the revamped auto insurance program?

Rivera: I haven’t conducted any polls on what the average consumer thinks about the new auto insurance program. I have heard from critics of the system who don’t think they have received any reduction in pricing. But our data demonstrates that if you’re in the new system and getting liability-only coverage and the state minimum, you should be saving significant money, and you should be pretty happy with new system. I would argue from a choice perspective consumers should be happier. Under the new system, consumers have options, whereas under the no-fault system, they didn’t.

IJ: What challenges will you tackle next?

Rivera: There will continue to be debate about changing auto insurance from no-fault to tort. The challenge in the bigger picture is getting more information to consumers. Whether it’s healthcare, auto, Medicare, prescription drug sign-ups, or any other issue, our challenge is to make sure consumers have good information.

IJ: I’m seeing a theme that you’re focused on the consumer. But how has the insurance industry reacted to changes you’ve implemented?

Rivera: I believe I have a good relationship with insurance agents and brokers, and good communications. The challenge with the insurance community, in particular with independent agents, is that they are in positions of trust. They are put upon to provide good information to customers, so I want to make sure they’re talking to consumers about options.

IJ: Does that mean you’re going to move toward some sort of regulations on disclosure?

Rivera: We’re not planning to implement mandatory disclosure. When you look at disclosure, you want to make sure it’s meaningful. You don’t want it to be too much information so the customer is so overwhelmed he or she doesn’t read anything. And you also want to make sure the consumer doesn’t have too little information. There are no plans for mandating disclosure, but I am open to ideas on how to make disclosure, whether it’s new disclosure requirements or reducing disclosure, in the best position to help consumers.

IJ: What’s your philosophy on regulation and management?

Rivera: I always walk through a big picture philosophy on regulation. It’s a good thing when we remove unnecessary interference. It’s a great thing when consumers have more choice, which you could see using our auto insurance changes as an analogy.

When government and legislature decide they know what’s best for coverage, that’s pretty risky. You might already have private health insurance coverage and can’t afford it. It’s a positive step when we move away from those types of mandates on the public side. My philosophy is let consumers, rather than government, provide what fits consumers’ needs. Give consumers more power.

The second step, then, is if you give consumers that responsibility, then the appropriate role for government is to be the nat
ural, objective provider of good information so consumers can make good choices.

Third, if you’re going to let consumers make choices, you have to have competition and choices for them. Competition works when consumers are informed and competitors exist so people are competing for consumers’ business. To get that level of competition, you need a regulatory environment that is inviting for insurance companies. Get rid of burdensome rules, the old pit system where government told insurance companies that they had to offer this coverage. Instead, let [insurers] have more flexibility to come up with unique [programs]. After Colorado switched to the tort auto system, there have been 25 additional insurers writing coverage for auto.

Once you do all that-empower consumers by providing them with better information, having a lot of carriers to choose from-then you really need to make sure there is a level playing field in which rules are abided by by insurance companies. Take title insurance, for example, in Colorado. The system really had a lot of competitors, but they weren’t competing on a level playing field. When the department uncovered shams through affiliated business relationships or captive relationships, we realized those relationships were creating an unlevel playing field. We’ve been a national leader on cracking that.

My philosophy is give consumers information to empower them to make decisions, make sure they have choices with a positive regulatory environment, and make sure you enforce laws so that there’s a level playing field. That’s what we strive for.

IJ: Sounds reasonable. Let’s change gears. At the recent NAIC meeting, there were discussions about a national catastrophe insurance program. How would Colorado feel about that, given that there aren’t many large, natural disasters in the state?

Rivera: You raised a raised a really relevant point in what would Coloradoans have to gain from what’s being discussed in a national catastrophe insurance program? That’s something I’m still studying.

IJ: The Independent Insurance Agents and Brokers of America is an advocate of the SMART act, which will change regulation to some degree in providing uniform standards among states and adopting competitive rating. Do you think this is a good or bad thing?

Rivera: State-based regulations are extremely important. It’s to the benefit of consumers to have more localized regulation instead of having the federal government impose consumer laws. I agree with the concept of greater uniformity. And I believe it can and is being achieved. I hate for federal government to intercede when states are already moving toward that model.

IJ: My final question is do you think the Broncos will make it to the Superbowl?

Rivera: [Laughs]. I think the Broncos have a shot they’ll have to go through Indianapolis, which is a pretty tall order. I think they’re a better team than were before, and Indianapolis is probably a better team than they were before. I wouldn’t necessarily bet on them-I’m not a betting man-but I think they’ll have a pretty good run.

Topics Auto Agencies Legislation Colorado