Calif. Commissioner Poizner: Insurance Agent Advice Critical

As California’s third elected insurance commissioner, Steve Poizner has had a wealth of accomplishments. Among other things, he:

• reduced the Department of Insurance’s operating budget by 13 percent, which allowed him to reduce fees for agents, brokers and insurers and send $20 million back into the marketplace;
• created anti-rescission rules to prevent health insurance companies from canceling consumers’ policies improperly;
• increased insurance fraud-related arrests, overseeing nearly 2,800 arrests in his first three years; and
• paved the way for Californians to purchase pay-as-you-drive insurance.

In making those changes, Poizner said it has been crucial for him to listen, especially to independent insurance agents and brokers.

“The [agents’ and brokers’] point of view, of doing the right thing, fighting for consumers, ended up being the view that really helped me as insurance commissioner,” Poizner said looking back at his term in office. “If I made a tough decision, it was always based on what would really help consumers, and I got a lot of really great advice from agents and brokers.”

Offering advice to incoming Commissioner-Elect Dave Jones, Poizner added, “The insurance commissioner makes hundreds of difficult decisions. There’s a lot of unintended consequences, and I encourage the next insurance commissioner to do just a lot of information gathering early on in order to really understand the broad scope of the massive insurance markets here in California and to [understand] the important role that the 300,000 agents and brokers play to making the insurance markets work effectively.”

Poizner said early in his term, he set up an agents and brokers advisory committee and met with them every quarter. He also held face-to-face meetings with leaders in the agent and broker community, and spent time in their offices. The consultations were essential, he said, because he realized that agents and brokers don’t work solely for insurance companies, but that they are fighting for consumers, similar to the job of the insurance commissioner. He encouraged Jones to continue with these meetings.

Agents and brokers want the insurance companies to be offering lots of products so that they can offer lots of choices to consumers, he said, so understanding their point of view is crucial, he explained. For instance, that view was essential when Poizner made auto rating factors place more weight on a person’s driving record than ZIP code.

Another issue Poizner learned was important to California consumers was that earthquake insurance products needed improvement. “We made some progress in making earthquake insurance through the California Earthquake Authority a little bit more affordable in some categories and created more options like lower deductibles … but still, only about 11 percent of California homeowners even have earthquake insurance, so we need to improve the affordability and quality of that product,” he said.

He said the California Earthquake Authority needs to continue to look for ways to find cheaper sources of capital and redesign the product so that it’s more attractive for consumers to purchase earthquake insurance.

As Poizner prepares to leave office, he said he hopes Jones continues to be tough on fighting insurance fraud, because fraud costs eventually are passed onto consumers.

“Enforcement actions are a very important part of what we do at the Department. … When I say enforcement actions, I mean use the regulatory authority of the Department of Insurance to make sure that insurance companies fulfill their obligations to policyholders … [and] create an environment where insurance companies want to be in California offering lots of choices to consumers.”

Ultimately, the insurance commissioner of California is one of the most powerful economic policymakers in the state, Poizner said. The DOI has more than 1,000 employees, and about a $150 million budget. “It’s one of those types of posts that no matter what decision you make, there’s going to be some people that are angry about it. You have to get used to the fact that this is not a consensus-building post … the job is to always be there to fight for the consumer and do the right thing for the consumer … to fulfill the obligations that the Legislature assigned to the Insurance Commissioner through laws and statutes,” he said.

Decisions that the insurance commissioner make affect every business, consumer and family in the state, he said, noting he hopes Jones and Governor-Elect Jerry Brown have a positive effect on the state in turning the economy around.

“I’ll be watching carefully, because the state of California’s in deep trouble,” he said. Noting he might return to the private sector, serve on a board of directors, or run again for governor in four years, Poizner said he won’t be content to sit on the sidelines as the state continues in crisis mode.

As he did in his insurance commissioner post, Poizer said, “I’m going to be there, fighting to get this great state back on track.”

To listen to an exclusive podcast with outgoing Insurance Commissioner Poizner, visit:

Topics California Fraud Agencies