N. D. Poolman-supported Insurance Bill Given Okay after Association Review

A proposal to regulate the resale of life insurance policies, which former Insurance Commissioner Jim Poolman played a key role in drafting, was not subject to improper outside pressure, a national regulatory agency has concluded.

Opponents of the measure, joined by some consumer advocates, had questioned whether it was written to favor some elements of the life insurance industry, and whether its provisions were influenced by campaign contributions to Poolman and the North Dakota Republican Party.

Responding to a request by consumer advocates, the National Association of Insurance Commissioners hired an attorney to review how the law was drafted. The North Dakota Legislature approved the measure last spring, and the association intends to promote it as a model bill for other states.

The lawyer, Lynn McCreary, concluded its final language was not the result of “undue or improper influence,” an association statement said.

Poolman said he knew from the beginning that there was no conflict of interest.

“I have always run the Insurance Department with the utmost integrity and ethics, and now it’s been proven,” he said.

Don Morrison, of Bismarck, who is a member of an association panel of consumer advocates, said the statement did not address conflicts of interest or the problems created when state insurance regulators go to work for private industry.

State insurance commissioners have defended the process used to write the law, Morrison said.

“It really is no change from what they’ve been saying all along,” Morrison said about the statement. “I don’t think anybody really expected (the NAIC) to overturn this model law.”

Sandy Praeger, the Kansas insurance commissioner and the association’s president, said in a statement that the NAIC would shift its focus to coaxing other state legislatures to approve the measure.

“We were confident going into the review that the model amendments had been subjected to thorough and open debate, and we have been looking forward to confirmation of these facts,” Praeger said.

Poolman resigned as insurance commissioner last August, 16 months before his term was scheduled to expire, to establish a private consulting firm. Gov. John Hoeven appointed Fargo attorney Adam Hamm to finish Poolman’s term, and Hamm intends to run for election this year.

Morrison said NAIC commissioners and officials have assured the consumer advocates’ panel that they plan to consider proposals on conflicts of interest and discouraging the “revolving door” between state regulatory jobs and private industry.

“None of this is really about the former commissioner of North Dakota. It’s about how do we have ethical and good regulation of one of the most powerful industries in the world,” Morrison said. “You need to have high ethics, and you need to have tough conflict-of-interest (rules).”

The legislation in question establishes more disclosure requirements, rules and restrictions on “life settlement” brokers that resell life insurance policies to investors.

In a life settlement, which is also called a viatical settlement, the insured person is paid a percentage of the life insurance policy’s value. Investors keep paying the policy’s premium and collect its value when the insured person dies.

In 2006, Poolman was chairman of an NAIC committee that drafted the model legislation. The association approved its final language in June 2007, after Poolman was no longer head of the panel.

Poolman said McCreary did not interview him during his review. “I think, by and large, what they were looking for was to see if there was any sort of improper outside influences, and they didn’t find any,” Poolman said.

“This has been driven by life settlement companies that don’t want to be regulated,” he said.