Moving on: Several former insurance commissioners have parlayed their experience into new opportunities. (Industry Strategies).

A former Maine insurance superintendent, Brian Atchinson, likes to recall the conversation at a dinner he shared with seven other insurance commissioners in an Atlanta restaurant in December 1992. The group was discussing how each had been occupied before coming to their state posts.

"The only one with a substantive and lengthy career in the insurance field was Sam Fortunato of New Jersey," recalled Atchinson, who was in his first year as Maine's insurance regulator. "He had been with a large insurer and was looked up to by so many people. He said that when he retired [from that company], he was able to move into a job he always wanted and was the most gratifying he had ever had. He was in his late 50s and had become a short-order cook."

Atchinson said he was "struck by the juxtaposition" of Fortunato's chosen vocation to those of the others. They had been trial lawyers or consumer advocates, had joined the Peace Corps or had pursued insurance careers.

Fortunato wasn't a cook for very long, however. Then-New Jersey Gov. Jim Florio soon tapped him to become the state's chief insurance regulator.

What commissioners do when they leave their posts can be as diverse and unpredictable as what they did before they got there, but many put their knowledge and skills to work in the insurance industry, in public-service jobs, or some combination.

"Half the commissioners come from and return to the industry," said former Texas Insurance Commissioner J. Robert Hunter, who is now director of insurance with the Consumer Federation of America. "It looks good on their resumes and helps them get executive positions. That's why commissioners so frequently pull their punches."

California's first elected commissioner, John Garamendi, is a candidate again for the job after serving three years as the No. 2 administrator at the U.S. Department of the Interior. He acknowledged a "revolving-door syndrome" from many kinds of public posts back to private-sector jobs. "It's not new, but when properly managed, it's not a problem," he said. "The question arises as to where loyalty is. It's not universal, but I've seen many examples where it is a problem." Garamendi said that in President Clinton's administration, high-level employees agreed in writing not to lobby any agency they had left for five years.

George M. Reider Jr., formerly commissioner in Connecticut, said that what commissioners choose to do when they leave depends on many factors, including age. "What you find is that if you have a younger person who serves in government, certainly they're going to return to the business community," he said. "In my situation--more of a senior--I want to offer my experience in the insurance arena. I'm anxious to return. I still have a lot of energy. Others cap off their careers and go into retirement."

Reider, who has also served in elected positions at the municipal level, said people who have served in government gain a "great appreciation" for how important it is that governments operate efficiently and effectively. "You also gain an appreciation for the sacrifice you make to be in public service," he said. "The compensation is not as great, you're out in front of the public, and not everyone will agree with what you say and do."

E. Benjamin Nelson, who served briefly as commissioner in Nebraska before launching a career in law and politics, was in his 30s when he left the commissioner post. "I couldn't retire," he said. "I had to work. My goal had always been to run for governor, and I pursued that goal with intermediate steps along the way."

Nelson, now a U.S. senator from Nebraska, said that whether serving as commissioner is a career steppingstone or capstone, it is rewarding. "I don't remember ever talking to somebody who was unhappy about having been appointed or elected to a commissioner job," he said.

RELATED ARTICLE: Garamendi Seeks Re-Election in California

John Garamendi was California's first elected insurance commissioner. Now he would like to return to that job after serving three years as the U.S. Department of the Interior's No. 2 man behind Secretary Bruce Babbitt and more than three years working for a Los Angeles-based private firm that primarily invests the assets of one wealthy person, Ron Burkle.

Garamendi left the commissioner's job to seek the Democratic nod for governor. He was unsuccessful in that bid, but President Clinton appointed him deputy secretary of the Interior.

"I'd had a lot of experience in the California Legislature dealing with water issues, resources issues and the like before I became commissioner," Garamendi said in explaining his appointment.

Garamendi faces a crowded field in his bid for re-election. Fourteen candidates have registered, including four Democrats and five Republicans. The primary is March 5, and the general election is Nov. 5. Garamendi said he is running because his successor, Chuck Quackenbush, ruined the public's trust and confidence in the department. Quackenbush resigned in June 2000 after he became the focus of investigative hearings into alleged misappropriation of insurer fines involving the Northridge earthquake in 1994.

"I had built an agency that was arguably the best consumer protection agency in the nation," said Garamendi. "The integrity was destroyed, the ability to assist consumers was largely diminished, and the morale and capability of the department to quickly address the issues the insurance industry has are yet to be rebuilt. [The current commissioner] Harry Low has made much progress, but much is left to be done."

Garamendi has promised not to accept contributions from the insurance industry. "My experience tells me there is too great a conflict of interest, far greater than in any other office because of the nature of the job commissioners do," he said. "You're involved in legislative and regulatory matters. You're judge, jury and collector of fines. It will certainly be a spirited primary, and I look forward to it."

Garamendi said California's next insurance commissioner will have to deal with national and international issues "in a big way," particularly the issue of federal regulation of insurance, and that his experience in Washington helps qualify him for the job.

"Having been in both places, I understand state and federal regulation," he said. But he said he would not have a position on the American Council of Life Insurers' optional federal chartering proposal "until the details are known.

"I've got no knee-jerk opposition to it," he added. "I understand the benefits of uniformity across the nation, but I'm aware of the problems federal legislation and regulation can bring, since there are unique issues in each state."

John Garamendi

California insurance commissioner, 1991 to 1995

Current Position: Left private investment firm at the end of 2001 to seek re-election as California insurance commissioner.

Previous Experience: Two years in the private sector before serving 16 years in the California Legislature; served in the Peace Corps. Later served as deputy secretary, Department of the Interior.

Long Journey Leads to Ethics Post for Atchinson

Brian K. Atchinson, a former Maine superintendent of insurance, recently accepted the job of executive director of the Insurance Marketplace Standards Association, the group formed by the life and health industry to address market-conduct problems and bestow an ethics seal of approval on participating members.

"It's a terrific opportunity," he said. "Someone once said once a regulator, always a regulator. There's an attraction to the responsibility of having the pen in your hand-the authority IMSA is great, because it's promoting best practices, and that's something I care deeply about."

Atchinson was vice president and managing counsel in the law department of the UnumProvident Corp. when a headhunter contacted him about the IMSA position. "It was a classic call," he said. "He asked if I knew anyone who would be interested, and I gave a few names. Then he called back a few weeks later. I hadn't been looking to make a move."

Atchinson said he was excited to be part of the management team at the Portland, Maine-based company at the time Unum and Provident were merging. "I had a couple of great bosses, was very involved in all facets of the business side and parts of the organization and had a great team of people in offices in Worcester, Mass.; Chattanooga, Tenn.; and in South Carolina," he said. "We did a lot of work to get into great shape, getting the staffing levels right and merging systems. By the time I left, we had gotten into great rhythm."

At UnumProvident, he gained firsthand experience in how long product and rate filings could take. "They would get approved efficiently in 30 to 40 states, but those last few could take 18 to 24 months," he said.

The approval process handicaps insurers vs. other kinds of financial-services companies, said Atchinson, who called it "very sobering" and led him to believe that the many differences among the states are no longer warranted, he said.

Addressing those kinds of problems for insurers is part of the promise of IMSA that Atchinson would like to realize as he builds on the work of predecessors Robert Googins and Paul Mason. "I must work at the state and federal levels with officials to make sure the IMSA process is understood and that it is constantly strong," he said.

Universal Exam

Each IMSA member undergoes a market-conduct self-analysis overseen by an IMSA-accredited independent assessor. Companies that complete the self-assessment receive a three-year accreditation and the right to use the IMSA seal on the advertisements and literature. Atchinson said he wants to follow up on Mason's work to have regulators rely on LMSA's work rather than conduct their own market-conduct exams. Atchinson's experience at UnumProvident showed him that the inconsistency among states in conducting these exams is just as onerous for companies as product and rate-filing.

"They are like snowflakes," he said. "It's rare to find any two alike. It's not unusual for an insurer to find itself subjected to eight or 10 different market-conduct exams a year. Some are shorter and some are longer, the costs are very different, and the outcomes are widely divergent."

Regulators have become more familiar with IMSA's work and are increasingly recognizing it as a valuable entity Atchinson said.

"We're certainly receiving much more recognition now than a few years ago;' he said. "We're seeing the same kind of incremental acceptance by rating agencies as well. Three or four years ago, there was none."

Atchinson sounded a note of caution about the NAIC's decision to make consumer complaints available online at its Web site.

"It's a useful tool, but one needs to be careful one is comparing apples to apples," he said. "One of the issues has been that states define consumer complaints differently. We need to have legitimate data that has consistent meaning for everyone, that doesn't trample on the rights of individuals and insurers in the data being used. There's a huge responsibility for getting it right and making sure it is fair and fairly presented."

Brian K. Atchinson

Maine superintendent of insurance, 1992 to 1997; NAIC president, 1996

Current Position: Executive director, Insurance Marketplace Standards Association

Previous Experience: General legal counsel, Maine State Department of Professional and Financial Regulation, which oversees the state's Bureau of Insurance, joined in 1989. Previously spent 15 years in the private sector specializing in legal and marketing work for health-care facilities company, international soccer and baseball, including Olympic committees.

Hunter Chooses Consumer-Advocacy Role

J. Robert Hunter, director of insurance for the Consumer Federation of America, likes insurance. "I grew up in an insurance home, and insurance is a wonderful concept," he said. "It's the kind of business idealistic young people would want to go into. It helps people at their time of greatest need. The problem is, it's turned into a money-grubbing business."

These days, Hunter spends about one-third of his time consulting with state governments, which he says is the "only thing I do for money." He works pro bono with the federation, and he spends almost as much time working pro bono for tribal reconciliation in Africa, a cause he took up in 1978 through his church, which operated a hospital in Uganda after dictator Idi Amin fell from power. In December, he returned from Burundi, his 26th trip to Africa.

"Like anything, it can be very rewarding and very frustrating," he said. "I was working in Rwanda when the genocide started."

Hunter is also a member of the National Association of Insurance Commissioners' funded consumer program, in which the NAIC pays room and travel expenses for a designated cadre of activists who speak on behalf of consumers at quarterly meetings.

Among his accomplishments as an industry activist, Hunter is most proud of his success in persuading the NAIC to factor investment income into rate-making. "I wrote my original report in 1980 calling for total-return rate-making," he said. "Every insurer factors investment income into the formula now. Before, companies didn't want the float measured."

The first state to adopt the regulation was Texas, and it caused insurers to factor in about a half-billion dollars, he said. "That's how I got to know Ann Richards," he said, referring to the Texas governor who appointed him commissioner.

Online Complaints

Hunter was buoyant about what he considered another big victory in January: the NAIC's decision to make available online its consumer-complaint database.

"The industry didn't want that out," he said. "It's a big tool for consumers, because it shows how insurers treat other consumers. It seems to me that if we're moving toward less regulation, then you need better information."

But Hunter also cited a big disappointment from the January meeting: the NAIC's inexorable move toward deregulation of commercial insurance. "It's ridiculous for two reasons," he said. "One is that premiums are already skyrocketing this year, and the other is that we don't have competitive markets. And now the industry is asking Congress to bail it out [over terrorism coverage]. I'd be embarrassed if I voted for a bill that socialized the losses and privatized big premium increases. So I'd rather the NAIC get a handle on the huge price increases."

Hunter was critical of the industry when it requested government help following two other recent disasters, Hurricane Andrew in Florida and the Northridge Earthquake north of Los Angeles. In both cases, the states formed pools to provide coverage to properties the industry deemed too risky. "The industry tells government to stay out of our business, except when something like these things happen," he said. "So this industry is not a risk-taking industry; it's risk-avoiding. When threatened, it turns to government for help, but in between, it thinks of insurance as a product. But it isn't a product; it's a social mechanism. We forget between disasters that an insurance company is the people, and the company is the bookkeeper."

He had intended to stay in the commissioner post for two years, but his term was cut short when Richards lost her re-election bid.

"For me, the commissioner job was not a stepping stone to anywhere," he said. "It was only a temporary venture. But it did help me represent the consumer more effectively before the state insurance commissioners."

As commissioner, Hunter held hearings and made some progress on Texas' redlining issues. "I got some insurance written in the harder parts of Houston," he said.

J. Robert Hunter

Texas insurance commissioner, 1994 to 1995

Current Position: Director of insurance, Consumer Federation of America

Previous Experience: Joined the Federal Insurance Administration in 1971, where he assisted in establishing the Riot Reinsurance Program, a response to the insurance crisis that developed after the race riots in the late 1960s. Federal insurance administrator under presidents Ford and Carter. Served pro bono for 13 years with the National Insurance Consumer Organization, beginning in 1980.

Kaiser Applies the Law to Insurance

Linda S. Kaiser says she is one of those people who "fell into the insurance industry." A graduate of the University of Pittsburgh School of Law in 1981, she could have taken a job involving tax issues, but she instead chose the position of assistant counsel at the state's insurance department.

Kaiser has been involved in insurance ever since, all in the role of private-sector legal counselor in Philadelphia, except for her time as commissioner. Currently, Kaiser advises insurance companies, agents, vendors to the industry and policyholders on insurance issues. She advises on acquisitions, business strategy planning, program and product development, and compliance initiatives. Privacy issues were big last summer, she said, as insurers began to implement the new privacy laws. Kaiser also helps companies with regulatory matters, particularly state filings, and she has a litigation practice on behalf of companies and policyholders.

Having served as commissioner has dearly helped her career, Kaiser said. "When you're counseling a company on their compliance initiatives, you know what a regulator will focus on," she said. Her name is also more recognizable as a result of her time in the public position. She is invited to speak before many attorney groups and industry groups.

When she accepted Gov. Tom Ridge's appointment to the commissioner's post, Kaiser's aspiration was that Pennsylvania would be recognized as a top-notch regulator by all constituencies served. To realize that goal, Kaiser said she instituted training and education programs for the department staff and improved the department's technology.

Kaiser attracted criticism in her final year for not recusing herself from a request by Cigna Property & Casualty Co. to restructure into two holding companies, one to handle runoff business and one to handle ongoing operations. She approved the request, but a Pennsylvania Commonwealth Court judge overturned it and blasted the insurance department for not holding public hearings on the issue.

Kaiser shrugged off a question about the rough waters during her term. "I think all public policy officials must realize that there will be disappointed constituents as they make decisions they've been hired to make as a leader of a regulatory agency," she said. "There are conflicting opinions and arguments on every issue brought before a commissioner. Just like a judge, you will leave one side or the other disappointed."

Best of Two Worlds

Back in the private sector, her dual credentials of juris doctor and chartered property and casualty underwriter--a rare combination--have given her an edge over competitors. "If you're going to dedicate yourself to a particular industry, it's important you have an in-depth understanding," she said. "It allows an attorney to spot both legal and practical issues, so when you render legal advice, you're giving not only a pristine legal answer, but in a context that can be practically implemented."

Kaiser is currently working with clients who are trying to craft an appropriate solution to Pennsylvania's medical malpractice insurance crisis. "While commissioner, I looked at the issue and started to phase out the catastrophic loss fund, a state-run program that provides the second layer of coverage for hospitals and physicians' she said. "I think legislators and providers will look closely again at whether and when it should be phased out and whether tort reform would be a solution."

An insight Kaiser has gained during her career is that states need to be aware of what is going on in the financial-services industry elsewhere. "When I was first with the department in the early 1980s, I asked what other states do," she recalled. "The feedback I got was that it didn't matter, that we're from Pennsylvania. It's become clear to me that you can't make decisions about the insurance industry in a vacuum, You must be aware of what other states and other countries are doing and of what else is going on in the financial-services industry. Being isolated and insular is not the best way of dealing with this industry, because it touches every component of life."

Linda S. Kaiser

Pennsylvania insurance commissioner, 1995 to 1997

Current Position: Partner and co-chair of the Insurance and Financial Institutions Practice Group at the law firm Saul Ewing LLP 

Previous Experience: Senior counsel to Cigna Corp., 1985 to 1992; joined Reliance Insurance Co. in 1992 as assistant general counsel; returned to Reliance after resigning as insurance commissioner.

Nelson Follows Political Path

E. Benjamin "Ben" Nelson's career path has alternated between public service and politics and the practice of law.

"I've always believed in public service," Nelson said. "I didn't want to go stair step from one public position to another. I wanted to give myself the opportunity to participate in the private side. It helps when you're in public service to know what the private sector is all about."

In 1990, he was able to capitalize on his political experience by defeating a Republican incumbent governor, and he completed his second term in 1998. Then he went back to private practice, this time with the Omaha law firm of Lamson, Dugan and Murray, where he specialized in insurance regulatory law, international trade and energy law. He was the Democratic nominee for U.S. Senate in 1996, but lost. When Sen. Bob Kerry decided not to seek re-election in 2000, Nelson won. Before his election, he co-founded Kaufman, Nelson and Pattee in Washington, D.C., a governmental affairs firm.

Nelson said his experience as an insurance regulator helped form and solidify his legislative views. "If you participate in the field of regulation, you learn more about the regulated industry," he said. "You have a better appreciation for the strengths and shortcomings of government and your ability to regulate and provide public service. Government can be a junior partner, but if it becomes the senior partner, the system collapses."

A proponent of state regulation, Nelson is skeptical about federal regulation of insurance. "Look at what happened with the savings-and-loan industry, and the federal government only had to deal with assets," he said, referring to the crisis and federal bailout about a dozen years ago. "If it gets its hands on the liability side of the insurance balance sheet, particularly in property/casualty, heaven help us."

Lack of public awareness about the role of state insurance regulation is actually a good thing, Nelson said. "Otherwise, the system would be public driven rather than private-enterprise driven.

"Hopefully the insurance folks that came to the Senate for terrorism help learned what it is like to deal with the federal government," he said. "I honestly don't see how you can ask the states to regulate solvency and the federal government to regulate the direction of the industry."

Even though Nelson served as insurance director, it did not give him name recognition for his runs at public office. In fact, he said only about 1% of voters knew him after he had served as director. "I knew about state government, and I obviously made contacts," he said. "That was helpful. But knowledge of how government should and shouldn't work helped me craft a message and win over the voters."

Nelson predicts more partisanship in the Senate this year with the midterm elections. "But there are things that have to be done--a prescription-drug bill, a terrorism package and other important legislation. I'm going to continue to work with the centrist commission to find common ground."

And he doesn't reject the possibility of seeking the presidency. "I haven't thought about it in any definite way," he said. "Also, I don't know if I have the motivation to do that. I enjoy what I'm doing right now. Should that change, or I become dissatisfied with the incumbent or the next incumbent, that could be a possibility."

E. Benjamin Nelson

Director, Nebraska Department of Insurance, 1975 to 1976

Current Position: U.S. senator, Nebraska

Previous Experience: Two four-year terms as Nebraska's governor, state campaign adviser for Democratic presidential candidates in 1976 and the state campaign manager for presidential candidates in 1980; president and chief executive officer of the Central National Insurance Group, 1980 to 1981; chief of staff and executive vice president of the National Association of Insurance Commissioners, 1982 to 1985. Resumed his law career in 1985 at the law firm Kennedy, Holland, Delacy and Svoboda.

Nichols Finds the Right Fit.

In late 2000, George Nichols III, Kentucky's insurance commissioner, was finishing his one-year term as president of the National Association of Insurance Commissioners and was ready for a better-paying job in the private sector. He found the right fit at New York Life Insurance Co.

"Throughout his career as insurance commissioner, industry association president and adviser to governors and nations, George Nichols has demonstrated the same qualities of strength, integrity and humanity that are the hallmarks of New York Life," Sy Steinberg, president, chief executive officer and chairman, said at the time he recruited Nichols.

As a regulator, Nichols worked hard for balanced regulation under which consumers would be protected and companies could thrive.

"So many states did one or the other, and the other got hurt," he said. That philosophy led Nichols to seek a position with a mutual insurer because the policyholders are the true owners.

Nichols also chose New York Life for its market-conduct standards and compliance program, an area that occupied much of his time as a regulator. And he wanted a company that was diversified enough to use his many areas of expertise, including financial services and international business. In 2000, Nichols chaired the NAIC International Committee.

Champion of State Regulation

Lastly, Nichols wanted a CEO and a company that agreed with the modernization and reform of the state regulatory system he had worked so hard to bring about during his NAIC presidency. "I put in a lot of time and effort on the NAIC statement of intent, so I wanted to go to a company whose CEO would support those efforts," Nichols said.

New York Life has made use of Nichols' skills in many areas. For the first seven months, he worked on an educational initiative in China with Beijing University, sponsored by the Asia Pacific Economic Conference. Nichols said the Chinese wanted to learn how to run a company and how insurance regulation works in the United States. "They knew China was on the verge of World Trade Organization membership, and they recognized that foreign competition would move into their market," Nichols said.

Nichols has been involved in several other company initiatives. He is coordinating three segments of the company--life and annuities, international and investment management--to create and market special products for high-net-worth individuals.

Another initiative is an individual retirement account rollover program for existing customers who are changing jobs and taking investments out of their employer's retirement programs. For agents nearing retirement, Nichols is working on a succession-planning training program. This will help agents as they phase out of the business and help the company to conserve the business of their clients.

Nichols is also currently responsible for communications to the company's field force of 10,000 career agents. He learns from agents how they would like products to be modified, and then he helps manage the rollout of the new products and tells the agents about them.

Nichols' overseas work began in 1997, as the NAIC coordinated a big international push with the U.S. Commerce Department. For example, the Commerce Department agreed to help Egypt develop an advanced regulatory structure, and it asked Nichols to participate. He also visited India, Japan, China and Vietnam as they tried to open their markets to insurers from other countries.

"For all the bad things people say about our state regulatory system, it's still an excellent system," Nichols said. "Countries would take our rules and regulations and pass them into law. Egypt said it had passed every model law we had written, but it just didn't know what they meant."

To help satisfy his urge to still be involved in public service, Nichols said he is working with the company to find ways to put computers into youth programs in the city and to work with the black community.

George Nichols III.

Kentucky insurance commissioner, 1995 to 2000; NAIC president, 2000

Current Position: Senior vice president and assistant to the chairman, New York Life Insurance Co.

Previous Experience: Executive director of the Kentucky Health Policy Board. Also served as vice president of Marketing for Athena of North America Inc., a national electronic data interchange clearinghouse; executive director of Product Development at Blue Cross/Blue Shield of Kentucky, and chief executive officer of Central State Hospital.

Reider Exports His Insurance Expertise

International consulting and teaching college have occupied George M. Reider Jr. since the end of his tenure as Connecticut's insurance commissioner.

Connecticut has a one-year "stand-back period" that prohibits former insurance commissioners from negotiating with or seeking or accepting employment from a regulated entity. Reider kicked off that 12-month period in the southeastern European nation of Macedonia as a member of a financial-services volunteer corps out of New York. The corps asked him to help Macedonia's ministry of finance establish an insurance regulatory body.

"I wanted to do something I would enjoy and that would benefit from my experiences as an insurance regulator," he said.

"I didn't have any thought I would become the insurance commissioner, though I had been in government jobs," Reider said. "I didn't realize how it would move me into international exposure.

"It was very exciting to do it. All of us should do some public service, whether teaching or singing in a choir. My earlier service in town government served me well," he said.

Reider's Macedonian assignment lasted about 10 days, during which he worked from early morning to late evening. He helped assemble an organizational chart, action plan and budget, and then he presented the proposal to the minister of finance. Macedonia already had a few private insurers when Reider was visiting, but now it has an insurance department to oversee an emerging insurance industry. A well-regulated insurance system means that the companies will attract new capital into the country, Reider said.

The corps subsequently asked Reider to help in Kosovo and in neighboring Albania, but the Sept. 11 terrorist attacks in the United States caused him to postpone his trip, which is tentatively rescheduled for this year. The new assignment is to help Insig, the domestic carrier, manage its claims and underwriting and compete with foreign companies. Insig is an Albanian company with branches in Kosovo.

International Experience

Reider gained expertise in helping foreign nations in insurance regulation as a member and chairman of the NAIC's International Committee. During that time, he also served as a technical adviser to the U.S. Department of Commerce. In that role, he traveled to China, Japan and the eastern European countries of Hungary and the Czech Republic.

He had also been a representative to the Paris-based Organization of Economic Cooperation and Development, an international organization helping governments tackle economic, social and governance challenges generated by a globalized economy.

"What became evident is that insurance is a keystone to economic development, and the potential for U.S. companies is enormous," Reider said. "Look at the potential in China, where per-capita spending on insurance is a very small amount."

He said per-capita spending in the United States is about $1,800. India also offers great potential, he said.

In the United States, major highways and large buildings would not be built without insurance, and few people could own automobiles.

"Now officials in foreign countries realize how important insurance is to the development of their countries," Reider said. "For the people, it is something new. They are being asked to pay a premium for the first time. Insurance had been something that government had pretty much provided in a limited way."

Upon leaving his commissioner post, Reider's chief occupation was teaching at his alma mater, Lebanon Valley College in Annville, Pa.; Ford-ham Law School in New York City; and the University of Connecticut in Storrs, Conn.

Last year, a colleague from his days at Aetna, Adam Abram, asked Reider to join Omega Management as a consultant specializing in claims handling.

"I still have a lot of energy, and I wanted to go back into the business community," he said.

George M. Reider Jr.

Connecticut insurance commissioner, 1995 to 2000; NAIC president, 1999

Current Position: Consultant with Omega Management Inc., a start-up specialty reinsurer 

Previous Experience: 31 years with Aetna in Hartford, and earlier with Home Insurance Co. in New York. Also served as a councilman in Steelton, Pa., and Farmington, Conn.

Regulatory Focus Leads Willis to Create New Insurer

Robert Willis doesn't like to use the word redlining; it connotes racial discrimination and blame. He prefers more polite language. And during his tenure as insurance commissioner in Washington, D.C., he worked tirelessly to bring more insurance coverage to poor neighborhoods rather than engage in demagoguery 

While commissioner, Willis chaired the Urban Insurance Availability and Affordability Task Force, a title he calls a euphemism for insurance redlining, which is defined as the systematic refusal of insurers to issue insurance on property in neighborhoods they regard as deteriorating.

Willis came to his regulatory position after 10 years with Cigna, experience that taught him that insurance was not populated by evil people and that a targeted blame-game strategy would be neither fair nor useful. But he was not afraid to write an article about redlining, in which he was critical of regulators, consumers and the industry for not working together to solve the problems.

According to Willis, the main problem is that traditional carriers don't know how to reach the underserved poor. That is why his major focus in recent years has been to form the New America Insurance Co. His business partner, Hank Hubbard, is chief executive officer.

The company has formed a managing general agency in Florida that writes New America products, but it is also free to write business for other insurers.

"The demographics all argue there is an emerging group of people in America, including Hispanics and African-Americans, a new emerging consumer base that any company with its head out of the trees should have its eyes on," he said.

One of the keys is to recruit members of underserved populations to be agents. "Unless a traditional agent has a way of going direct to underserved consumers, it isn't going to happen," Willis said.

New America has also found customers by taking some 7,100 policies out of the state's joint underwriting association, a pool of policies on properties in what Willis calls "high-exposure urban communities," which few companies want to insure. The company ended last year with about 13,000 policies in all, primarily homeowners, and a goal of selling commercial insurance coverage this year. "It's a huge underserved market in Florida;' said Willis." Commercial businesses are critical to the success of urban communities, and coverage of commercial risk means that people are at work."

The company is also concentrating on finding agents who, instead of working part time, will run their practices as full-time business owners. "We spend the time and effort to help them develop a business plan and understand the product and the underwriting guidelines," said Willis. "We're also requiring that they have Internet capability. To the extent we can eliminate expense, profit is there for the agent and for us."

Traditional carriers do not see these kinds of agents because they don't meet premium volume minimums. New America helps them with front-end expenses and training in return for having the underwriting risk carefully articulated to it.

Willis also expects 2002 to be a major year, in that New America will finally be able to conduct business in large urban states, a factor that could lead to more capital. Most insurance departments want to see that a company has been in business for three years before allowing it to come to their states as a foreign insurer, Willis said.

Raising capital is the chief obstacle to the growth of New America, Willis said, but the company has received underwriting help from Guy Carpenter & Co.

"They've been interested in urban markets, and we have been benefiting from their expertise along the way;' Willis said.

His time as a regulator contributed greatly to the formation of New America. "As a regulator, I understood the full problem from the consumer, company and regulator point of view," he said. "There's a way we can all be made whole on this if we accept responsibility and think Outside the box."

Robert Willis

Washington, D.C., insurance commissioner, 1991 to 1994

Current Position: President and chief operating officer, New American Insurance Co., which he co-founded in 1998

Previous Experience: Director of taxes and regional vice president at Cigna Corp. After leaving commissioner's post, practiced law and was executive director of the District of Columbia Life/Health Guaranty Association.