Oklahoma’s Holland Sets High Standards for Insurance Department

Commissioner views agency as a resource for industry and consumers.

Oklahoma Insurance Commissioner Kim Holland has been at her current job less than six months, but new to the insurance industry she’s not.

A former insurance agent with a specialty in employee benefits, Holland has over 20 years’ of experience with a multi-lines independent agency, which she managed over the course of the last several years. Holland, whose grandmother was an agent for New England Life Insurance Company, is only the second woman to serve as Oklahoma’s top insurance regulator.

In an interview with Insurance Journal, Holland spoke of her commitment to the integrity of her office and addressed issues that are currently affecting the insurance environment in her state. Following are excerpts from that discussion.

Insurance Journal: The previous insurance commissioner in Oklahoma resigned amid allegations of unethical and illegal behavior. What steps are you taking to re-establish confidence in the insurance department?

Kim Holland: It’s actually a multi-pronged effort. First and foremost, during the last several months, and this will continue on for the foreseeable future, is getting out and talking to groups. I have speaking engagements two to three times a week, to both industry groups as well as our private sector civic groups and so forth, to just let them know about how I feel about the role of the insurance commissioner from the standpoint of recognizing what a privilege it is to serve in this capacity and that the office is owned by the citizens and taxpayers of the state of Oklahoma and I take my role as custodian of that responsibility very seriously. …

That’s probably our biggest effort and will continue to be over the course of the next several months–to make sure that people get the sense that … the office is open to them and we want to hear from them if they’ve got concerns and problems.

The good news is the staff here has done an outstanding job. During the time that I was being considered for this job, I spoke to numerous industry folks to find out what their perception was of the business of the department … and really without exception got positive feedback that even in spite of the difficult circumstances under which people worked, the business of our business was getting handled and handled well. …

I’m raising the bar here by implementing some higher standards with respect to accountability of our time, accountability of our dollars, accountability of our practices. All of those things have been made public, so our public does understand that we are taking our ethical obligations seriously and that we are backing that up with policies and procedures internally that require accountability for each of us.

IJ: Have the legal or ethical problems experienced by the former commissioner jeopardized any of the decisions that were made during his tenure?

KH: We’re re-looking at decisions that were made … where he used discretion, the discretion that this office permits. We are re-evaluating those decisions.

If there were discretionary decisions made with respect to permitted practices of insurance companies, we’re re-looking at those. We’re calling those companies in and we’re explaining to them that it’s a new day, and our standards are our standards and that’s what our expectation is–that our companies will meet my standards.

We’ve not uncovered any missing dollars or anything like that. But I’m not inclined to grant any exceptions or permitted practice that jeopardizes our policyholders’ security.

IJ: How does your background as an insurance professional assist you in your role as a regulator?

KH: It’s interesting to spend your entire career in a business and you think you know everything. You think you know a lot. And then you approach it from a different vantage point and realize there’s a whole new world out there you weren’t even aware of.

In my career as an agent I had very little interaction with the department and although I did a lot of research when I was being considered for the job, until I got in the job really didn’t fully appreciate the breadth of the role of the office and the breadth of the industry. Nor did I really appreciate the scope of the national issues that impact the insurance industry. …

Part of my conversation about the insurance industry is to let [people] know what kind of contribution our industry makes to our state from a tax standpoint and a revenue standpoint, just how many people we license, how many insurance companies are doing business here. Coming in here it was a big surprise to me just how large this job was, just how large an impact the department does have on the industry and the consumer.

What my years of experience have done is allow me to hit the ground running, al-though I’m learning something new literally everyday and there will continue to be a lot to learn. I think that’s one of the benefits of the insurance industry, it’s a dynamic industry that impacts literally every household in our state and across the country.

At the same time I understand the lingo. I understand the consumer concerns. I understand what it’s like to run a small business. So, many of the things I have done in my career as an insurance agent really are adding a perspective to our operations that would not have existed otherwise.

IJ: What are agents’ concerns right now?

KH: Our agent population with respect to the department would like to improve licensing and continuing education, the manner in which we license people. They’d like to streamline things, have access to more electronic interaction with respect to continuing education. They all recognize that our industry is changing rapidly. They’re hungry for quality and relevant continuing education. …

The industry understands that this office is really a reflection of the industry and they’re as concerned as anyone that the office gets back on track with the proper public perception.

I think another advantage or positive that I bring to the table is because I’ve been in this business for a long time in Oklahoma. I’m well known and well regarded so there’s a trust factor. They feel like I’ll do the right thing. They may not always agree with me but they know I’m going to work to do the right thing.

IJ: The investigations by New York Attorney General Eliot Spitzer have gained a lot of attention in the press. How do you see the issues of contingencies for agents and brokers, and compensation disclosure playing out in Oklahoma?

KH: When I took this office, the very first thing that I did was call a meeting of our industry people. … I also invited the state Chamber of Commerce to get a consumer perspective. And I just asked them–do we have a problem in Oklahoma and what are the issues? And the consensus in general I can safely say is: No, we really don’t have a problem. Not of the magnitude that is being discussed or debated that spawned Spitzer’s actions.

Could we improve on communication and disclosure with our customers? Yes, but we want to do that in a meaningful way. We had actually been interacting with that group–relaying information that was coming out of NAIC [National Association of Insurance Commissioners], relaying information that was coming out of NCOIL [National Conference of Insurance Legislators]. NAIC came out with their proposed standards. NCOIL has come out with other proposed standards.

Right now we’re continuing the discussion. … I think we all agree we want to make sure that our consumers feel secure in their decisions and that they feel they are being treated fairly.

Our state chamber said they had not received one complaint from any consumer. Our office has not received one complaint from any consumers relevant to commissions or contingencies. …

So, what I want to make sure that we do is, work with the industry to come up with a methodology or a concept or an agreement on how we want to handle commission disclosure and contingencies. …
Let’s figure out how to police ourselves. Let’s step up to the plate and determine that and agree on it and communicate that to our clients. We’re working on that collaboratively with an eye towards what’s right for the consumer.

The other thing I guess I would add to that is, the state feels a sense of accountability to the National Association of Insurance Commissioners. I do. At the same time, we’re not California, we’re not New York, we’re not Texas. We are Oklahoma. We have our own issues, our own problems and we will respond to them in our own way.

So although I have great regard and respect for the NAIC and we look to them for guidance, ultimately we’ll make a decision that’s right for Oklahoma.

IJ: What’s happening with PLICO [Physicians Liability Insurance Company]?

KH: PLICO is a stock company, owned by members of the Oklahoma State Medical Association. And like many plans similar to it, it was really developed to fulfill a specific need for their population for medical malpractice. At one time it provided workers’ compensation and health benefits, it does not any longer.

Due to some early mismanagement they were challenged–their underwriting was inadequate and their premiums were inadequate–and consequently they do not meet our statutory requirements for solvency.

Because they insured a large number of our medical professionals and because right now in the private marketplace we have not covered all the needs of doctors … the state was concerned about PLICO being placed into receivership. We didn’t have a place for those physicians to go.

Additionally, the burden it places on our guaranty fund–it would have had to been absorbed by our solvent carriers. That’s a concern.

The legislature gave PLICO 18 months a year ago to try to get their house in order, and the insurance commission under an assistant receiver reviewed them and gave them some specific things that they were asked to do, which they complied with. …

Currently and over the course of the last year we have treated them as if they were being supervised. They’ve cooperated with us and given us information about their financial standing and so forth, but the fact of the matter is, I believe in under other circumstances were they not to have the moratorium from the legislature, which basically says that the insurance department cannot put them into receivership, they would be in receivership. …

This legislative session they requested an extension on their moratorium for three years–that is sitting on the governor’s desk waiting for his signature. Part of the reason it passed is because we interceded and said that we want more formal enforcement. Not that we didn’t receive cooperation from PLICO, but for the protection of our solvent carriers and for the protection of the policyholders of PLICO, we felt it was critical that we had formal authorization to supervise this company.

With the cooperation of PLICO we entered into a consent agreement that spelled out our authority in monitoring their financial and operational functions. So forall intents and purposes, we are supervising PLICO. And since we reached that agreement we did not object to the moratorium. …

In the interim we’ve got to do whatever we can do to encourage competition in this state so we have an alternative for these physicians. Otherwise, in the absence of that we’re really left with the situation at hand.

IJ: Do you have any additional message you’d like to convey to insurance agents in your state?
KH: Whether it’s insurance agents or insurance companies, one of the things I recognize is the department is frequently viewed as kind of the hammer. While we have to serve in that role–part of our job is enforcement–it’s enforcement for benefit of not only our policyholders but for those insurance agents and companies that are wanting to do business in an ethical and effective manner.

And what I want our agent population to know and our insurance population to know is that we want to be a resource as much as anything. Our door is open. I do want to hear from our agent community about their areas of concern, their ideas about how we can improve our interaction, how we can improve and work with them to improve the business environment here in Oklahoma.

I’m hoping that we can change the perception of the organization from catching the bad guy to being a resource and facilitator to help make Oklahoma a better place to live and work.