Striking the right balance

Steven M. Goldman was sworn in as Commissioner of the New Jersey Department of Banking and Insurance on March 20, 2006, after the Senate Judiciary Committee and full Senate unanimously approved his appointment. Prior to his nomination by Gov. Jon S. Corzine, Goldman was a senior member and 22-year veteran of Sills Cummis Epstein & Gross PC. During his time at the firm his focus revolved around corporate law, focusing specifically on mergers and acquisitions; banking and finance; joint ventures; and leveraged buy-outs.

“When I accepted the Governor’s offer to join the administration, I made a commitment to him that I would like to share with all of you today. As Commissioner I will perform my responsibilities honestly, conscientiously, efficiently and fairly for the benefit of the people of New Jersey,” Goldman said at his swearing-in ceremony. “I reiterate that commitment today to the Governor and to all of you.”

In this edited interview with Insurance Journal’s Andrew Simpson — one of 15 video interviews with state regulators from across the country available in their entirety online at www.insurancejournal.com — Goldman discusses the transition from the private to public sector, his role as regulator and key issues of auto, home and health insurance.

What’s it like to be in the public sector?
Goldman: Very different from the private sector.

Have you learned something about the insurance industry that you didn’t know before?
Goldman: I’ve learned quite a bit about the insurance industry, yes, Andy.

And about politics, I assume?
Goldman: That, too, yes.

Have you been able to develop a philosophy of the role of a regulator? What do you think the role of the Insurance Commissioner is?
Goldman: I think the role of the Insurance Commissioner most fundamentally is to strive to strike the right balance between protecting the consumer and enabling the industry to remain in a competitive and active sort of competition within the industry, while still making sure that the consumers are protected.

Towards that end, have you established some priorities within the department?
Goldman: We have a number of priorities that we’ve established within the department at this point. We’re looking for example at the question of how to deal with the uninsured in New Jersey. We have about 1.3 million uninsured people in New Jersey and we want to try to address that.

That’s health insurance?
Goldman: That’s health insurance. We’re looking at the medical malpractice problem in New Jersey and developing ways to try to address that. We’re also looking to continue to maintain and complete the reform of the auto insurance market which we feel has been very successful to this point.

If you could elaborate on that. In New Jersey, a big story has been the auto insurance market and its turn around. What are your impressions of the reforms and what they’ve done?
Goldman: I think the reforms have been very successful. Actually, they’re a good illustration of what I think is good regulation. I think the basic thrust of the reforms was to continue to protect New Jersey consumers, but at the same time give carriers the ability to commit to the marketplace, compete heavily with one another to the benefit of the consumers and yet still make a profit. That’s really what the market has become in New Jersey. We have seven of the 10 major carriers in the country back in the New Jersey market. We have more applications pending and we have had a tremendous reduction in the premiums that are being paid by New Jersey consumers. I think we have returned over a half billion dollars to New Jersey auto insurance purchasers, and across a very broad spectrum. About 75 percent of policyholders have received a benefit of that reduction.

Are there still some things to be done, do you think, or is it best to leave it alone for a while and let the reforms work out?
Goldman: Well, there are a couple more pieces of the reform that I think we need to look at and we’re looking at, but basically I think it’s in place. We want to make sure that the industry appreciates that it’s going to remain as it is, it’s going to continue to be competitive, it’s going to continue to be a market where you can come in and you can make money and at the same time you’re going to be facing, you know, good competition from others in the industry.

So it’s important to maintain stability about what the regulations are and what the rules are?
Goldman: Exactly. That’s exactly right.

Has New Jersey felt the impact of property insurers pulling back and having to deal with reinsurance prices? Have they felt it in the pocketbook or in availability?
Goldman: To this point, we have not. It’s an issue we are monitoring, but to this point it has not presented a problem, particularly with respect to property and casualty issues as they relate to potential storms and those sorts of problems is where we’re concerned, but we haven’t seen it as yet.

So is your emphasis now on preparedness and helping customers deal with that?
Goldman: Yes, with the beginning of hurricane season we issued a press release reminding consumers to check their policies, to see what procedures they might need to follow in the event of a natural catastrophe, to make sure they had the appropriate numbers of their carriers or agents and to make sure that their insurance information was available and in order.

Have you had an opportunity to meet the independent insurance agent leaders and have a sit-down with them?
Goldman: Yes, we’ve had. … That’s one of the things about coming into this job from the private sector. I’ve had many, many meetings and opportunities to talk to people, including the associations of the independent agents, yes.

Back to the property insurance. There are some proposals floating around for a New Jersey-only catastrophe fund. Others suggest a national fund. What are your thoughts on that?
Goldman: Well, I don’t know yet. I don’t think we’ve had an opportunity to fully explore whether a New Jersey fund or a national fund makes sense. I think, the metropolitan New York area, and New Jersey bordering Pennsylvania on one end and New York on the other, if there were a catastrophe, any such event would not be restricted to New Jersey? So, whether a New Jersey-only fund would make sense is something we’re looking at. We haven’t made any conclusion about it as yet.

What do you hope to get out of involvement in the National Association of Insurance Commissioners? What issues do you hope to focus on with NAIC?
Goldman: Well, I think the NAIC is a very valuable organization. I think they really do a very thorough and complete job of communicating among the state’s regulatory bodies, providing an opportunity to really educate one another on issues that are taking place. For myself, I think the issue of health insurance, availability and affordability of health insurance, is something that I’ll probably get involved in at an early stage.

Have you determined whether you think federal regulation would be preferable to state regulation?
Goldman: I don’t think federal regulation would be preferable. State regulation gives each state and its own unique customer base the opportunity to interact. I think the companies by and large appreciate the fact that they have a readily accessible regulator to deal with questions and I think from the consumers’ point of view, they have a readily accessible source to talk to if they have problems. So, from my look at it, it appears to work pretty well.

Is there an organization like the NAIC on the banking side?
Goldman: Yes, there is. There’s a Conference of State Bank Superintendents that performs the same sort of function on the banking side.