Michael Rounds was having trouble sleeping at night. An insurance agent by trade and a politician by passion, he had told close friends and associates that he would not run for the governorship of South Dakota. It was 2001, a year after Rounds’ term in the state Senate —where he served as Republican majority leader—was limited by law and a year before the Republican primary for governor.
After examining the situation, Rounds—a partner in the Fischer-Rounds & Associates Inc. agency in Pierre, S.D.—concluded he couldn’t compete against the two much better-funded candidates in the Republican primary. But his gut concluded otherwise, to judge from the stomach churning Rounds told Insurance Journal he suffered during the weekend after he’d made his decision. He tossed and turned in bed at night until his wife finally told him, as much out of annoyance as support, that he had to go with his gut and run for governor.
On a shoestring budget and without wide name recognition outside the small town of Pierre (population: fewer than 15,000), Rounds threw his hat into the ring. He went on to win the primary and the governorship. As governor, he has taken steps to modernize the state’s insurance marketplace and hopes to use the insurance industry as an engine to help drive the state’s economic revitalization.
Always interested in politics
While many agents are more than happy to leave politics to the paid lobbyists in their state and national associations, Rounds told IJ he was passionate about politics and public policy from an early age.
“My interest in politics goes back to college. I had a B.S. in political science at South Dakota State,” he said. “One of the things my partner and I discussed when I first joined the agency back in ’82 was my political goals. I ran for the Senate in 1990 and I served in the legislature for 10 years. We’ve never found a better process anywhere in the world.”
Though Rounds’ decision to run for governor didn’t come as a surprise to Fischer-Rounds President Karl Fischer, the 68-year-old majority shareholder told IJ he was not exactly thrilled about it, considering that Rounds is tapped to succeed Fischer as president to perpetuate the 124-year-old agency.
The South Dakota Legislature only meets 35 to 40 days a year, so even Rounds’ role as Senate majority leader was not a full-time job. From 1990 until 2000, Rounds continued to do his part in running the agency and producing business, Fischer said.
On a Friday in early 2001, Rounds told Fischer he’d elected not to run for office. After a restless weekend, however, Rounds had a different story.
“You know, Karl,” Fischer recalled Rounds saying, “I can’t sleep at night. I’ve been thinking about this, and I’ve decided to run for governor.”
“Michael,” Fischer told the future governor, “now you’ve made it so I can’t sleep at night.”
The agency has survived in Rounds’ absence, however. “We’ve never wished him anything but success,” Fischer said. “We think he’s doing a tremendous job as governor.” Rounds is no longer involved in the day-to-day management of the agency, and his assets have been placed in trust. Fischer votes in Rounds’ place via proxy.
Rounds’ experience in the Senate seems to have come in handy in getting bills passed. Twenty-one of the 23 bills the governor proposed in 2003 were passed, and 20 of 21 were passed this year.
“This past session was just a masterful job of guiding the legislature and moving bills through that were important to the state,” according to Larry Ahrendt, executive vice president of the South Dakota Association of Insurance Agents.
The biggest push of Rounds’ governorship so far has been the 2010 Initiative, a package of programs designed to increase tourism to the state (most famously, home to Mount Rushmore), attract new businesses, become a research and technology development leader, and improve the overall quality of life. The plan, which is available on the Web at www.2010initiative.com, reads a lot like a company’s business plan. That is not an accident, Rounds said.
“It’s like in an insurance agency,” he explained. “It’s nice to say you want to double your premium volume, but you’ve got to lay out the steps to get there. Are you going to make more phone calls? Get new carriers? Develop a new expertise? What are the actions you’re going to take. With any business plan, you have to be self-critical.
“That’s not always smart in politics,” Rounds admitted. “But I think that as long as you make recommendations on how to fix the problems, people will get on board. That’s where state government and business can be similar. Nothing happens until you find consensus. That’s also true in the political arena.”
Modernizing the insurance marketplace
The two major actions Rounds has taken related to the insurance industry came from opposite poles. One was a reaction to an immediate and ongoing crisis, while the other was a forward-looking attempt to improve the underlying regulatory framework.
Midway into his first year on the job, there was a severe crisis of availability in the individual health insurance market. Virtually all the carriers offering the coverage had pulled out of the state, according to Ahrendt.
“He brought the legislature back in session and got a health-risk pool put in place,” Ahrendt said. “He really saved the industry, saved the market.”
The long-term problem of fast-rising health-care costs still plague South Dakota, as it does the rest of the country.
In another area, Rounds tried to get ahead of the ball by signing Senate Bill 37, which transformed South Dakota from a prior approval state to a file-and-use state. The bill also exempts commercial lines insurers from complying with state rate- and form-filing requirements when selling to a qualified risk manager.
“We’re looking for a business-friendly environment in the state,” Rounds said. “Other businesses can’t succeed unless there’s a healthy insurance business to help transfer and share risk. That’s not just about capacity, but about expertise—in health care, construction, financial services, etc.”
In addition, Rounds said he is exploring how to make South Dakota more attractive to captive insurers, risk-retention groups and self-insurance mechanisms. “We want to learn what Vermont has done right,” Rounds said.
Rounds said that after he is done as governor—he plans to run for a second term—he plans to return to the insurance business and the Fischer-Rounds agency.
“I hope that Michael comes back to the agency once his political career is over,” Fischer said. “How it will play out nobody really knows.”
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