NAIC’s study of race and insurance continues
The current effort to address
racial inequities in insurance at
the NAIC is bigger and grander than anything
attempted in the 1990s.
By Kevin P. Hennosy
“Let us close the springs of racial poison. Let us pray for wise and understanding hearts. Let us lay aside irrelevant differences and make our nation whole.”
—President Lyndon B. Johnson, remarks upon signing the Civil Rights Bill, July 2, 1964
Having already solved so many of humankind’s previously vexing problems, the National Association of Insurance Commissioners (NAIC) this year, launched an effort to address “race and insurance.”
The Special (EX) Committee on Race and Insurance serves as “the NAIC’s coordinating body on identifying issues related to: [sic] 1) race, diversity, and inclusion within the insurance sector; 2) race, diversity, and inclusion in access to the insurance sector and insurance products; and 3) practices within the insurance sector that potentially disadvantage people of color and/or historically underrepresented groups.”
No overtime hours expected on this project. Strictly 9 to 5 with a leisurely lunch. Perhaps even a couple of old school martinis.
Yes, I am making a joke at NAIC’s expense, again. It is my métier. It is what I do.
Best of luck
One wishes those individuals engaged in this reform effort the best of luck. They will need it.
Also, reformers should consider obtaining copies of The Rules of the House of Representatives, The Army Ranger Handbook, and Tobin’s Spirit Guide. It never hurts to prepare for the worst.
Furthermore, the reformers must understand the rules of the NAIC, government, the personalities, and motivations of regulators. They need to count votes before meetings and guard against false promises. Do not rely upon others’ goodwill to carry the day.
Fire and riot
The current special committee is not the first earnest attempt at NAIC to address the disparate impacts upon African Americans and others that I have seen. Take for an example, an NAIC study of “urban” redlining in the early 1990s following the Oakland Hills firestorm in 1991 and the 1992 riots in South Central Los Angeles.
During that effort, the NAIC conducted a long series of meetings and hearings. Advocates for interested parties delivered testimony. Many regulators expressed disdain for the market conditions and business practices that advocates described to the committee. Other regulators quietly sat at the sessions with little or no reaction.
When it came time to draft a report on redlining, the then NAIC leadership began the process with a concession to several property/casualty insurer trade associations. The report would not recommend specific policies or contain a model law or regulation. The concession did not buy any goodwill.
The NAIC staff compiled a draft report documenting policy options to address redlining. The draft report presented a broad spectrum of regulatory approaches from the totalitarian to the libertarian. Consistent with the NAIC leadership’s promise to trade associations, the draft report did not make policy recommendations.
Despite the concession to the trade groups, there were signs of trouble ahead.
The NAIC staff member charged with compiling the draft report showed signs of stress. His wife told friends that her husband was not sleeping and was unable to eat. These symptoms reflected stress he felt receiving communications from both insurance carriers and trade association executives threatening his employment and future employment.
The pressure got to the NAIC staff member, and I am not kidding to say he never seemed to be the same guy after he “went through some things.”
When the NAIC convened to consider the draft report, those regulators and advocates who came to the meeting with an intention to polish the document were met with insurrection.
Peg Ising, a newly promoted senior staff member from the Ohio Insurance Department, tore into the draft document. Her comments made clear that her purpose was not to edit, but to weaken the report. The final drafting session turned ugly, so the regulators delayed final consideration.
At the time, regulators reported to me that a cadre of Property Casualty Committee members would block adoption of the report, unless Ising succeeded in “gutting” it. They also said, in staff workrooms, that Ising demanded that any references to the existence of redlining or any affirmative regulatory policies to correct it must be removed.
Ising was a friend of mine from Ohio politics, and from her earlier days as a low-level member of the insurance department staff. I asked her to talk with me about her sudden opposition to all things regulatory. She looked at me with an aggression that was not familiar to me. She told me there was no support for the left-wing stuff that staff put in the report. She shook as she said it. Her response and demeaner shocked me.
Yet, I understood. Peg Ising was a “holdover” from the previous gubernatorial administration of a different political party. The patronage system in Ohio was still strong enough to make holdovers rare. Even more rare was a holdover receiving a promotion. I believe that Peg was reacting to the political equivalent of making a deal at some crossroads at midnight with a man named Ned.
Then Ohio Governor George V. Voinovich was a long-time favorite of Ohio’s insurance carriers. When I worked in the Government Relations Office of Nationwide Insurance in the late 1980s, the company supported Voinovich’s political ambitions. In 1988, Voinovich challenged Senator Howard Metzenbaum.
I remember receiving calls from Nationwide’s Senior Vice President for Corporate Affairs Ken DeShetler asking whether we could find any company officers willing to fly to various Ohio cities that Voinovich wanted to visit. The company had a policy that any flight of the company plane needed to be to transfer a company officer for business purposes. DeShetler used the company officers’ travel to provide aid to Voinovich’s campaign without reporting it as an in-kind campaign contribution.
Voinovich lost that election but retained his political career.
Two years later, Voinovich reached the Governor’s Office. He was a spear carrier for Ohio insurers. My friend Peg Ising became a tip of Voinovich’s spear. Her career advanced at the department over the next dozen years.
The current effort to address racial inequities in insurance at the NAIC is bigger and grander than anything attempted in the 1990s. Today, the NAIC is studying all lines of insurance and its regulation, where earlier efforts mostly focused on property/casualty insurance and particular underwriting practices.
There is no reason to believe that insurance carriers and their trade associations will be any less aggressive today than they were 30 years ago. Certainly, there are governors and elected insurance commissioners who believe that The Birth of a Nation is a historical documentary and Song of the South presents a reasonable display of the Post-Reconstruction society in the rebellious jurisdictions.
Consumer advocates need to understand that merely delivering well-reasoned reports and testimony is necessary but not sufficient to win your cause. Unlike previous generations of NAIC consumer advocates, this one should organize members of the public to produce communications to the offices of commissioners, governors, or other political influencers. Get up every morning and ask yourself, how can I ruin Commissioner Widget’s day?
Even allies need to feel popular political pressure, to counter the pressure that the opponents of reform will bring to the debate. As Franklin Roosevelt used to say to advocates for progressive reform, “Make me do it.”
As the example of the 1990s makes clear, there can be neither dilettantes nor purists in this battle for reform. At some point before they want to, consumer groups will need to cut a deal because they will lack the political power to get everything they want. When that time comes, they should cut the deal.
As President Lyndon Johnson observed, “Any man who’s not willing to take half a loaf in a negotiation, well, that man never went to bed hungry.”
Kevin P. Hennosy is an insurance writer who specializes in the history and politics of insurance regulation. He began his insurance career in the regulatory compliance office of Nationwide and then served as public affairs manager for the National Association of Insurance Commissioners (NAIC). Since leaving the NAIC staff, he has written extensively on insurance regulation and testified before the NAIC as a consumer advocate.