John Fogerty once sang, “I ain’t no fortunate son.” As the son of an independent insurance agent who forced me to work in the office while I was growing up, I can relate to the sentiment.
Wisconsin Insurance Commissioner Jose Gomez, too, has shared that experience. The parting of ways comes in that Gomez fondly recalls those days. They are, he told IJ recently, treasured childhood memories.
Yet he moved halfway across the country to Madison, Wis., to attend the University of Wisconsin School of Law. And now he has come full circle, back in the insurance game as the 2003 appointee of Democratic Gov. Jim Doyle. Like The Godfather‘s Michael Corleone, just when he thought he was out, he was pulled back in.
IJ: Tell us more about your father’s career and how that has influenced your approach to producer issues as commissioner.
Gomez: His career lasted about 30 to 35 years. He had been both a captive agent and eventually an independent agent. He sold everything from individual lines to property/casualty to small commercial as well as and jumped over to the health world and sold small employer health coverage. He did that principally in the Mexican-American community in Southern California, about 30 minutes southeast of Los Angeles. I spent a lot of time in my dad’s office as a kid, answering his phone, stuffing envelopes, delivering policies.
When he used to run an agency, in fact, I was with him when he delivered debit reports, and when he settled claims and delivered death benefit claims and things like that to people. Overall, my father’s influence has been pretty pervasive in the manner in which I try to deal with people.
He was a good salesman; pretty honest. He could talk to a variety of people. Some of those skills work for me as commissioner of insurance. In terms of my approach to producers, I respect how difficult it is to be successful as a producer. I know how much pressure agents are under to adequately deal with the concerns of running their own businesses.
I’m very familiar with the pressures of working with clients with whom business is difficult to place. I also know how beneficial a long-term commitment to clients can be. Many successful agents have that experience.
IJ: And yet you chose a different road.
Gomez: I recognized that it’s a tough career path to follow. It’s very difficult to continuously produce in the agency world, and I don’t think it’s gotten any easier.
IJ: What’s your position on the recently introduced legislation (House Bill 222) that would force any insurer who covered the Fox River to be responsible for the entire sum which they had reserved for? Obviously, insurers have objected strongly, saying it’s unfair, unconstitutional and will drive up rates for everybody. What do you make of those arguments?
Gomez: I’m not in a position to really comment on it yet. I’m aware there’s a lot of activity on that issue. Apparently, one state–Oregon–has already passed comparable legislation, which is being litigated out in their Supreme Court. I’m sure that at one point we’ll be contacted and asked for our opinion on the bill. But we’ve not been asked to do that yet.
IJ: Wisconsin’s excess malpractice insurance fund has nearly $740 million in it. Gov. Doyle has proposed diverting $180 million to the general revenue fund. Couldn’t this ultimately result in higher insurance rates for doctors?
Gomez: I think the malpractice fund has almost $740 million in it. The proposed diversion of $180 million is broken down in three ways. Approximately $10 million is to be used for grants related to quality improvement, improvement for technology in medical reporting, which can often relate directly to malpractice claims.
Another $20 million is for resident training. It is fundamentally necessary that doctors who are practicing in our state are competent and not prone to creating claims. The other $150 million is devoted to paying medical claims to doctors to continue taking care of patients. The absence of those funds could result in fee-shifting to private insurance. So this proposal will improve quality, improve resident training and ensure that patients are taken care of.
This should not impact rates charged by private insurers for the first $1.3 million in coverage. The fund is for excess coverage after $1.3 million. That premium should not be affected at all by the diversion of $180 million. …
Then you’re left with a $640 million corpus that should be sufficient to pay claims. The most ever paid out in claims was $50 million. This year it’s going to pay out at most $15 to $20 million. The claims history and payment history has been such that in the immediate future there should be no impact on assessments for medical malpractice premiums.
IJ: Do you think the Office of the Commissioner of Insurance can keep regulatory pace with the growing popularity of Wisconsin as a domicile and, generally, a place for insurers to do business?
Gomez: I think our agency, like other state agencies, is facing the challenges of state government shortfalls. We could always use more staff. I hope that the core positions we’re going to get are regulatory in nature–company licensing and solvency regulation. … I’m hopeful we can retain level of expertise and the performance this agency has had for years.
IJ: How well is Wisconsin progressing in meeting the 2008 goals laid out in the National Association of Insurance Commissioners’ modernization statement and as part of the general effort to stave off federal legislation?
Gomez: My reporting duties are to the citizens of Wisconsin, not to Congress. And to the citizens of this state, this agency has been on the forefront of improving regulatory oversight of the industry for more than 50 years, really.
I inherited a good statutory scheme for regulation. I inherited a very good staff for carrying out that statutory scheme. Some of the initiatives that seem to be of some concern are ones we’ve carried out. We have market competition for rates. We have use and file for most product lines. Agent licensing is done on an expedited basis. We just licensed 92,000 agents in 2004. I can’t tell you the thousands of filings we’ve already accepted for 2005.
Wisconsin has been for years a good, competitive marketplace where some of the improvements in regulation were able to take place. We have no prior approval. We are working with the NAIC on other issues, such as single-portal form filing for agent licensing. Most states are already ahead of the curve. Wisconsin certainly is.
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