Consensus Builder.

North Dakota insurance Commissioner Glenn Pomeroy has influenced nearly every aspect of how states regulate the industry. Now he wants to be his state's top law enforcer.

As North Dakota's insurance commissioner for the past eight years, Glenn Pomeroy has plunged steadfastly into some of the most difficult problems and tasks facing the industry, including the creation of a centralized database for insurance agents, financial-services reform and the resolution of claims by Holocaust survivors and heirs.

Pomeroy, whose career in public service includes stints as a state legislator and state securities commissioner, is stepping down as the state's top insurance regulator at the end of this year. His new job--if he campaigns successfully this year--will be as North Dakota's attorney general.

Current attorney general and fellow Democrat Heidi Heitkamp is running for governor, and Pomeroy is not expecting a challenge in the June primary. He'll know for sure after North Dakota Democrats hold their convention this month. Republican state Sen. Wayne Stenehjem is seeking the Republican nomination.

Running one office while campaigning for another "won't be a cake-walk, but should be manageable," Pomeroy said. "I'm fortunate to live in North Dakota, where campaigns don't last as long, though I imagine it will get crazy come fall."

Pomeroy absorbed the public-service ethic growing up in the small town of Valley City, N.D. "It seemed we were always taking in people who needed a place to stay, as small as our house was," he said. His father, who died when Pomeroy was a teen-ager, was the town Santa Claus, and his 80-year-old mother still delivers food to the homebound through the Meals on Wheels program. The youngest of four children, Pomeroy has two sisters and an older brother, Earl, who was elected state insurance commissioner in 1984, served as president of the National Association of Insurance Commissioners in 1989 and is now North Dakota's sole congressional representative in Washington.

"By the time I was in high school, I was probably more interested in politics than my friends," Pomeroy said. He obtained most of his college education at the University of North Dakota, and his early interest in public affairs led him to get a law degree and serve in the Legislature.

Leaving a Legacy

When he leaves office Dec. 31, Pomeroy will have left his mark on the insurance commissioner's job, the industry and the international community as a caring diplomat with the ability to help disparate groups find common ground.

While serving as NAIC president in 1998, Pomeroy chaired the newly formed Holocaust claims task force, which focused on some European insurers who sold policies before and during World War II, but had not paid claims, in many cases, because entire families were killed during the Holocaust.

Pomeroy and task force members spent a year negotiating with European insurers. The negotiations ultimately led to the creation of the International Commission on Holocaust Era Insurance Claims. "Their task is to figure out how to get claims paid to people who had been denied benefits for 60 years," he said.

When Connecticut Insurance Commissioner George Reider Jr. assumed the NAIC presidency in December 1998, he asked Pomeroy to continue to lead the association's Holocaust task force and to serve on the international commission in his place. "We're on the threshold of resolving the claims matter, and with a sense of justice prevailing," Reider said. "If one person is responsible, I would say it's Glenn Pomeroy."

On Feb. 15, the commission began processing those delinquent claims. At the same time, it is trying to figure out how much money insurers should contribute to a humanitarian fund for needy Holocaust survivors. "It's too early to say my work is done," Pomeroy said.

Former U.S. Secretary of State Lawrence Eagleburger, chairman of the commission, has relied on Pomeroy to build consensus among the various groups involved. "He is as good as I have seen at bringing people together, even though they may start out disagreeing," Eagleburger said.

Eagleburger praised Pomeroy's control, decency in dealing with people and knowledge of whatever task is at hand. "Those things make him one of the most effective men I've seen in terms of bringing about solutions to tough problems, when those solutions have to be arrived at through compromise," he said. "This has been a far more complicated matter than I expected. The Jewish organizations do not always agree."

In addition to Pomeroy's diplomatic skill, Eagleburger turns to him for technical expertise. Resolving the issues surrounding Holocaust-era claims has required an intense amount of analysis. Eagleburger described how Pomeroy and an insurance industry executive put together a "superb" analytical piece on the factors that should be considered in deciding the size of the Holocaust fund.

"I don't think I've made any tough decisions without talking to him first," he said. Then Eagleburger--who was President Nixon's national security adviser and President Bush's secretary of state--added jokingly, "He has only one major failing--he's in the wrong political party." Pomeroy, like his congressman brother, is a Democrat.

For the Long Term

When Pomeroy joined the NAIC, consensus was far from the manner of the day. "It was like World War III," he recalled, with regulators and consumer advocates on one side, and the industry on the other. "I sat in on a meeting, and the level of animosity and acrimony between regulators and the industry in the room was unbelievable. They could hardly continue a dialogue. It was really, really bad."

That environment made one of his early consensus-building triumphs especially sweet. Pomeroy was involved with a working group that developed suitability guidelines for long-term-care insurance. The challenge was to develop standards so insurers weren't selling the product to people who couldn't afford it or didn't need it, he said.

"You need to try to reach consensus or you don't get anything done," he said. In the debate about long-term care, "the walls between the parties had been up a few years and nothing was getting accomplished."

When the NAIC executive committee voted to adopt the working group's suitability model, everybody in the room--regulators, insurance groups and consumer groups--applauded. "I think they were just applauding the effort of the organization to develop reasonable consumer protections" that could be implemented, Pomeroy said.

Setting the Code

By the time Pomeroy became NAIC president in December 1997, the tension between the insurance industry and regulators nearly derailed a nine-year effort to establish uniform requirements for insurers filing annual financial statements. Statements submitted by a company in one state meant little to a regulator in another state. Lack of uniformity also made it difficult for a company to determine what constituted a financial statement from state to state.

"This project had the makings of a train wreck about to happen," Pomeroy said. "Some states and the industry were polarized, and there was a real danger that nine years of activity was going to end in failure."

The issue put Pomeroy's consensus-building skills to the test. Patty Parachini, legislative director for the American Council of Life Insurers, credits him with rescuing the project.

As one of his first acts as president, Pomeroy created an ad-hoc task force of commissioners to sit down with industry representatives to figure out how to get it back on track. They met every quarter during his year as president, and the group eventually scored a major victory by getting almost unanimous support for its work.

Pomeroy has a "marvelous" sense of knowing when something is important to both the industry and regulators, and then getting everyone else to see how important it is, Parachini said. "He has the capacity to get the right people talking and to bring all sides and groups together to iron out the problem."

Technology Challenges

Pomeroy called on his experience as state securities commissioner when figuring out how to build a centralized database for insurance agents across the nation. Pomeroy recalled that as securities commissioner he had computer access to a wealth of information on any individual who requested a broker's license, regardless of which state the applicant was from.

In 1994, the NAIC's Producer Database Committee tried to build an agent-licensing model based on that concept, but the project was stalled because the committee couldn't figure out how to finance it, Pomeroy said.

When Pomeroy chaired that committee, he discovered that members of the insurance industry, especially the American Council of Life Insurers, were very concerned with rogue agents, who would rip off consumers and move from state to state, and regulators didn't have the ability to track them. "The agents were tired of this," Pomeroy said. "Company CEOs were getting sued and charged criminally."

A partnership with the insurance industry led to the Insurance Regulatory Information Network. IRIN, separately governed and funded, is rolling Out the Producer Information Network, an agent-licensing vehicle linking the industry and state regulators. "We can get away from the blizzard of paperwork, create efficiency, reduce cost and get it done quicker," Pomeroy said.

It has taken three years for this agent-licensing vehicle to make its debut, and Pomeroy has served as board president from the beginning. "The NAIC could pick up the pace a bit;" he conceded. "But radical change comes hard, and I understand. It's not a thing you do overnight?'

Last fall's passage of the Gramm-Leach-Bliley financial-services reform act has stepped up the pressure because it will impose a federal clearinghouse for uniform agent licensing if the states don't create one.

Rather than a threat, the reform law has been "a catalyst for understanding the changes are needed now, and we don't have 10 years," Pomeroy said. "That's fine, because we spent the last five years designing the changes?'

At the State Level

As one might expect, Pomeroy is a strong proponent of state regulation of insurance, which he predicts will continue, despite financial-services deregulation.

He points to his home state of about 640,000 people to explain why. Even with North Dakota's relatively small population, Pomeroy's office gets 30 to 40 calls a day from people seeking help with their policies.

"I firmly believe if insurance was regulated at the federal level, those people would be totally frustrated. They wouldn't be able to get hold of the federal regulator and get help in a timely manner," he said. "That's one of the fundamental reasons I believe state insurance regulation is here to stay-- it's accessible on the grass-roots level?"

At the same time, he also supports deregulation of segments of the industry.

The purpose behind much state regulation of insurance rates and policy forms is to make sure products for consumers and small businesses are priced fairly. Commercial-lines deregulation recognizes that large, sophisticated buyers don't need the same kind of protection.

"Let's get out of their way and deregulate some regulations that don't help them anyway," Pomeroy said. "We don't regulate the buyers, we just define them as those not needing to be as heavily regulated. Not everybody will need or be able to buy the kind of policy a Fortune 500 company would."

Global Perspective

As insurance becomes more global, he NAIC is helping to take the experience of U.S. insurance regulation to emerging markets. Pomeroy went to Vietnam last summer with Tim Fisher f the U.S. Department of Commerce International Trade Administration to conduct a two-day seminar.

"Vietnam is a very closed system, dominated by one state-owned Company. The notion of competition is foreign to them, but they are now working on their 14th draft of regulations," Pomeroy said.

Fisher pointed out that while the Vietnamese insurance market is very different from that of the United States, Pomeroy's background helped him relate to some of the country's insurance challenges. "He comes from a small state with a large agrarian population that experiences flooding issues," Fisher said. "He could connect, because they have significant flooding problems in Vietnam."

The purpose of the trip wasn't to impose the United State's way of doing things onto the Vietnamese, Fisher said, but to show how and why regulation of insurance is important.

Pomeroy knew this, and his sensitivity to the environment in Vietnam was critical to the mission's success. "Glenn, being the perfectionist, will think he could have done better," Fisher said. "Whether he realizes it or not, he innately has all the tools needed to pull this off."

Aspirations

If Pomeroy is elected North Dakota's attorney general, he won't be leaving behind everything related to insurance.

"The National Association of Attorneys General will be involved in the debate over privacy issues as the financial sectors converge and as the conglomerates increase cross marketing," he said. "Congress and the attorneys general will pay more attention to preserving individual privacy. My experience as insurance commissioner will help."

As insurance commissioner, Pomeroy most enjoyed his work on consumer protection, a role he'd get to expand upon if he becomes attorney general.

"I'm enthused about protecting the public from forces they don't match up well against," he said.

Pomeroy said he is looking forward to dealing with issues such as drugs and violence as attorney general. "The scope of issues is broader than the insurance commissioner, but the objectives are the same--defending and protecting the interest of people."

Glenn Pomeroy

Position: North Dakota Insurance Commissioner

Age: 43

Political affiliation: Democrat

Career: Elected to the North Dakota Legislature, representing Grand Forks, N.D., in 1978; appointed state securities commissioner in 1988; elected state insurance commissioner in 1992.

Family: Wife, Jean; three children: Kate, 13; Anne, 11;and Charlie, 5