The Commissioners: John Oxendine

Oxendine defends Main Street independent insurance agents

Georgia Insurance Commissioner John Oxendine, who was recently elected to his fourth four-year term, spoke with Insurance Journal’s Andrea Ortega Wells at the winter meeting of the National Association of Insurance Commissioners in December. The following is an edited version of the interview. The complete video interview is available at www.insurnacejournal/broadcast, in the video section of the Web site.

IJ: How are the affordability and availability of property insurance for Georgia’s coastal home and business owners?
Oxendine: We’ve been very fortunate in Georgia to maintain a good competitive market on our coast. We don’t have the historical problems that a lot of other states have. Therefore, we only allow companies to use historical data in rating information. We don’t allow the hurricane models that are used in a lot of other states. We want to keep a good competitive market. We want the agents to be able to serve their customers and be able to place that business.

We do have a wind pool, but we have kept the population of it low. We’re constantly wrestling with some of the companies trying to put big insurance loads on the homeowner’s market. That’s something we’ve resisted and have not allowed because we feel like reinsurers are really putting some of that from the Gulf coast and Florida and the Carolinas and really trying to put it on the Georgia citizens. That’s something that we think is very inappropriate, so we’ve resisted that. We’ve made companies actually absorb some of that or put that risk on other states.

IJ:How would you describe the overall property and casualty market in Georgia?
Oxendine: We have the lowest [rates] in the Southeast. Our homeowner’s rates are by far the cheapest; the most competitive market. Our automobile market is the lowest of all of the 10 large states. Actually, Illinois and Georgia about tie for having the lowest of big states around the country. Our workers’ comp market is one of the most competitive. It’s the most competitive in the South, so we’re very happy about that.

IJ: A recent agreement between Zurich and some attorneys general and other agreements with four large insurers either ban contingent compensation or require disclosure of compensation. Your state was not involved in these agreements but how do you feel about the deals?
Oxendine: I’m actually first going to give you my overall view about the agents in this issue, and then I’m going to talk specifically about the Zurich and other settlements and why we haven’t participated and never will as long as I’m commissioner.

Insurance agents, especially the local neighborhood agent, they’re really, really getting a raw deal on this. I will tell you as the advocate for consumers in the state of Georgia my number one ally is that local neighborhood Main Street agent. They’re the one out there fighting for the little guy. When I catch insurance companies doing something bad, half the time it’s an agent that picks up the phone and calls and says, “Now, don’t use my name, but look into this company. They’re doing such-and-such” or “My client is not being treated right.”

When the client is upset, their agents will tell them, “Go call John Oxendine’s office because he’ll get this fixed and he’ll take care of you.” The agent is there looking out for people. They really have a reason to be looking after people; it’s competition. If your agent doesn’t take care of you, you’re going to leave that agent and go to the next street corner and get another agent, because you’ve got so many available and it is a great competitive market that really keeps the agent working for people.

We’ve had some very large commercial brokerage firms that have done some bad stuff. Marsh – and we’re continuing our investigation on Marsh. We haven’t signed off on the previous settlement because we actually think it didn’t cover everything that Marsh was doing. They’ve done some bad stuff, and we’re dealing with that.

Insurance companies – AIG, a lot of large companies – have done bad things, but what they’re trying to do is put it back on the local agent, and that’s wrong. You don’t punish the local agent because somebody else did something wrong. There is nothing inherently wrong with a contingent commission. It’s a bonus. All a contingent commission is, is a Christmas bonus. What is wrong is when individual large brokerage firms and companies working with those firms misuse the principle of contingent commissions, and that’s what happened. It was individuals misused it. You don’t punish the innocent; you punish the guilty.

For that reason, I have not signed Zurich. I never ever will because it is fundamentally wrong. I am very disappointed in those attorneys general that participated in it. We’ve taken a position in Georgia that our attorney general does not have any jurisdiction to even deal with the issue. If he wants to sign it, fine. It would not be binding on any agent in Georgia. It would not be binding on any insurance company. We’re the only ones that can address that issue, and it is fundamentally wrong and unjust to the hardworking men and women that serve the insurance consumers of our state. Similar settlements just like the Zurich I would give the same answer to.

IJ: How do you feel about state attorneys general getting involved in insurance issues? Can you describe your relationship with your state attorney general?
Oxendine: We work very good with our attorney general. My attorney general is my attorney. It varies and, of course Georgia is different. We are an elected constitutional office. Under the Constitution, I am the only one that regulates the insurance industry. The attorney general has no jurisdiction. The governor has no jurisdiction.

Now, in some other states it appears like attorneys general may have some authority, but we would actually prevent our attorney general from sticking his nose into the insurance industry. If he started to, we would probably seek legal action against the attorney general to enjoin him from doing that.

The Constitution says that I will regulate insurance. I’ve been chosen by the people to do it, and we won’t let the governor or anybody else do it unless there’s specific legislation authorizing them to do that.

IJ: Do you think that a state should have appointed or elected commisisoners?
Oxendine: You’re going to get different views. I really like the elected better, and I’ll tell you why… Some that are currently [appointed] commissioners say, “Well, I don’t really go to those rotary clubs that much. I don’t go to that Chamber of Commerce. I don’t go speak to the citizens that much because I don’t have to hear from them. All I’ve got to do is just keep one person happy. As long as the governor’s happy with me, that’s all that matters.”

I’m constantly on the road. I will go to any civic group, speak to any group of Georgia citizens, because I want to know what their concerns are. I speak to insurance agent groups, but I also just want to speak to everyday consumers. I want to know how I can help them better. You don’t get that with the appointed commissioners…They want to keep the governor happy and other people. I could care less if my governor likes me or not. I actually get along very well with my current governor.

For example, my office is open from 8:00 in the morning until 7:00 at night. Very, very few states do that.

IJ: What is your relationship with independent agents?
Oxendine: My relationship is very good with the independent agents. We have four very active associations of local independent agents. We’ve got the Independent Agents Association, the PIA, the Health Underwriters. We’ve got NATHA. I routinely publicly encourage every agent to join one of those four professional agent associations…

Whenever I make a decision that’s going to affect agents, I pick up the phone and I call the associations. I say, “Come on down. I’m looking at doing some regs. Give me your input and let’s talk.” Now, lots of times we disagree. I do a lot of things that the independent agents sometimes don’t like, but the issue is that they’re always part of the process.

IJ: What was your most recent decision?
Oxendine: I’m not a big fan of credit scoring. The legislature has approved it, and I know the independent agents… well, in our state the Georgia Independent Agents Association really likes it; the Professional Insurance Agents are not as crazy about it. So you even get differences of opinion.

I’m not real crazy about it, and the reason is it’s sort of a “garbage in, garbage out” situation. I think the underlying credit reports are often flawed. When that credit report is flawed, then the credit score that comes from the model is going to be flawed. I don’t think the models are necessarily that bad, but you’ve got to have good data to go in there, and I do not have confidence in these underlying credit reports.

We have instituted a procedure of consumer protections that really go far beyond what any other state actually has. The only way we could actually have more consumer protections on credit scoring would be to actually prohibit the process entirely, which is not allowed by the legislature.

So, we used our discretionary authority to put in what we call guidelines. The guideline basically says if you do this, we’ll approve you. If you don’t do it, we’re not going to approve you. You’ve got to sue me, and people generally don’t like to sue insurance commissioners. I’ve only been sued twice in 12 years, so it doesn’t happen very often.

IJ: How has the industry responded?
Oxendine: The insurance companies are like, “Well, we don’t like, but yeah, we can live with it.” That probably means it’s right in the middle. I learned in law school that when both sides are a little bit upset you’ve probably done justice, and that’s what we’ve tried to do.

Topics Agencies Georgia