Consumer Reps Challenge NAIC On Revolving Door

McPeak says that she was "generally surprised at the tone of the [consumer] letter" because at least some of the consumer reps who signed the letter supported the model. She says that she continues to support the process and adds that the model came back to "A" Committee twice: Under Poolman and under her chairmanship. And, she notes, there are 12 other commissioners in addition to Poolman who supported the model and voted for it.

"I don't intend to reopen the model unless there is a groundswell among commissioners," she says. Trusts and life policies with trust features will be considered in a separate model, she adds.

She says that trusts had been included in an early version of the model but were removed because of concerns of the banks and the Office of the Comptroller of the Currency, that there could be conflicts in the law. McPeak also notes that she polled about 5 insurers over whether the model should be reopened to address trusts and was told that even simple stranger-owned life insurance policies were such a problem that the model needed to go forward and trust dealt with separately.

In his interview with National Underwriter, Poolman asserts that accounts of a $300,000 job and an apartment in New York as well as accounts of impropriety are "gossip." It is planted by the life settlement companies to discredit me and the good work at the NAIC." He adds, "If they bloody me up badly, no one will want to introduce it [in legislatures.]"

He acknowledges that he did accept a $25,000 contribution from Sara Bachrach, wife of Ira Brody, a partner with InsCap, New York, in 2006. He says that the contribution was "in accordance with state law" and that Brody has contributed to a number of candidates nationwide. Poolman also notes that InsCap is involved in premium financing and not in viatical and life settlements covered under the model. In 2006, Brody made a $15,000 contribution to the North Dakota GOP, according to the North Dakota Secretary of State Web site. Poolman was elected insurance Commissioner as a Republican.

Life settlement representatives and some representatives of life insurance financing have vocally disagreed, stating that the company uses trusts to participate in the industry. They petitioned state insurance regulators to defer until there was further discussion and to include trust in the model's adoption and petitioned the National Conference of Insurance Legislators, Troy, N.Y., to look at the issue and to include trusts in its model. NCOIL is currently developing such a model and could have it completed by its November meeting. The NAIC is now considering an additional model that would address life settlement like contracts including trusts that use life settlements and life insurance policies that use loans that exceed cash surrender value.

Poolman says that his experience with issues such as suitability of insurance products and reserving issues make him valuable to industry representatives, so it is not unusual for him to approach those who could benefit from his background. He notes that he was at the recent NAVA annual meeting in mid-September.

He says that in e-mails he has discussed the issue of McPeak's tenure and "joked" that he would speak to Bruce Ferguson, although he asserts that he has never done so.

And, he wonders "why life settlement companies are so afraid of being further regulated."

Contacted about the consumer letter, Birny Birnbaum, an NAIC funded consumer rep, and executive director of the Center for Economic Justice, Austin, Texas, says that "Jim Poolman has done more to help insurance consumers in North Dakota and the NAIC than any other insurance commissioner." Issues, he notes include a model law that requires products to be suitable not only for seniors, but for all consumers. The one point he disagrees with Poolman on is his approach in developing, but not necessarily the content of the model.

"I think that he paid a price. Any commissioner that really sticks his neck out" is subject to negative treatment, he adds.

However, he did say that a long list of past NAIC presidents including Ernst Csiszar and Al Iuppa, who have gone to work in the industry, suggests that a stronger NAIC policy on jumping to the industry is needed.

Bill Newton, executive director of the Florida Consumer Action Network, Tampa, Fla., says a few states have requirements in place but having a 2-year requirement for all states is not unreasonable. "It gives us comfort that a commissioner is not looking for a job." The revolving door is apparent both at the NAIC and in government more generally, he adds. "But we want a regulator to be focused on being a regulator and not to be looking too far ahead. We want regulators to be serving consumers and many of them do."