Interviewed by Kevin B. O’Reilly
Dale Finke doesn’t see what all the fuss is about. When Missouri’s Republican Gov. Matt Blunt nominated Finke to be the state’s insurance director back in February, some objected to how he was selected. Finke, the majority stockholder of St. Louis family agency ISU Corporate Insurance Management, was interviewed and recommended by a panel of insurance industry veterans.
The committee included members from St. Louis-based, Welsch, Flatness & Lutz Inc., Blue Cross Blue Shield of Missouri and the Missouri State Medical Association, who questioned Finke about “everything from experience to philosophy to goals,” according to Finke. After the panel recommended Finke, he then spoke with Blunt by telephone.
Former insurance director Jay Angoff told the Associated Press the selection process was “shockingly inappropriate.” A Blunt spokesman responded to the AP that “all the decisions that have been made, have been made by the governor.”
He entered the insurance industry in 1957 at the age of 18 joining his father, grandfather, and uncle at Finke Insurance, the family business begun by his grandfather in 1932. In 1971, the family insurance business branched into two companies, with Finke assuming the management and eventual ownership of the original company, whose name was subsequently changed to ISU Corporate Insurance Management. Now Finke tells his side of the story, and shares his plans for the next four years as the Show Me State’s top insurance regulator.
Insurance Journal: What impact does your extensive experience as an agent have on how you approach issues as insurance director?
Dale Finke: Many independent insurance agents and captive agents have spent their lives solving problems for policyholders. That comes first. My background as an agent gives me the platform to help solve problems. People need agents to navigate through the world of insurance. Also, I was in management, and I suspect I’ll be dealing with the same issues up here: people, budgets, time. Everything we want to do has to be done within one of those constraints.
What has changed is that I was in charge of management of my operations as an agent versus management up here. The principles of management probably haven’t changed. The insurance agent is constantly involved in solving problems. My grandfather started our agency in the little town of Jennings, Mo. I am in love with the insurance industry and, principally, my philosophy has been to help the consumer.
IJ: Former insurance director Jay Angoff told the Associated Press that the selection process that resulted in your appointment was “shockingly inappropriate.” How do you respond?
Finke: I was appointed by the governor. I don’t really know what Director Angoff wants. We shook hands on a public street. I have no comment on what his thinking is.
IJ: What about this criticism that Gov. Blunt didn’t have enough input from other groups outside the insurance industry?
Finke: I don’t know who the governor talked to. I’m sure he had a lot of input from a lot of people. He didn’t share that with me. I’m paying attention to business. I’ve said it before and I’ll say it again: My job is to make sure the consumer gets the right treatment and gets claims paid by a solvent insurance carrier.
IJ: Do you think, generally speaking, it’s good to have someone with industry experience as top regulator of the industry? Do you think there’s a conflict of interest?
Finke: My conflict of interest was solved by selling my interest in the insurance agency side of the business. I’ve got a lot of background in the industry, obviously. I think it would be very difficult to operate as a regulator without that; I’m sure there’s a learning curve. Ultimately, it’s your department of insurance that determines how things will go. We have an excellent staff with a lot of training and knowledge. That said, it’s very difficult for someone to come in and have no experience with the industry at all.
We have a staff of people that are concerned every day with consumer affairs, who make sure the consumer’s being treated right. I think we’ve got 60,000 calls a year in the consumer affairs department. We have an ability to monitor the marketplace and help people navigate the system.
The department spends a lot of time making sure the companies are dealing with people fairly. We use the expression, “Level playing field.” We want to make sure the customer/policyholder gets what he pays for. Once a consumer has entered into a contract with the insurance company, we want to make sure the insurance company is there to deliver on its promises.
IJ: As you know, your predecessor, Scott Lakin, and Gov. Bob Holden pushed hard to ban credit-based insurance scoring, a practice which has never been popular with agents and brokers. Where do you stand on the issue?
Finke: Credit scoring has gone through a transition from being totally objectionable. Parts of it are creeping into the system. I’m not convinced that credit scoring is right. So far, I think we’ve taken the right approach to allow companies to use credit scoring, just not solely to underwrite or renew. Those are the credit scoring laws in Missouri. There have been some abuses that have been corrected.
And agents across the state report abuses very quickly. Agents are very quick to adapt and implement changes to solve customers’ needs. They aren’t going to let companies get away with that. We see constant input coming from agents who are very attentive to customers’ needs.
IJ: Two sweeping legislative packages reforming workers’ compensation and the tort system were signed into law by the governor. How soon can we expect insurers to start responding to these changes?
Finke: I don’t think there’s a hard and fast rule about how quickly that kind of thing happens. That said, insurance companies are announcing big reductions and have an appetite to take on new policies and workers’ comp exposures. It will take a while, but it shouldn’t take that long.
IJ: What are your thoughts on the SMART Act and similar ideas that would give the federal government oversight of state insurance regulation?
Finke: Basically, I don’t think it’s good to have a fed law preempt state laws. The SMART Act is all about preemption. I don’t think our policyholders in the state of Missouri are served any better by having fed laws on them. Insurance has traditionally been regulated by states, and states have done a good job. I’m opposed to the SMART Act on the basis that it’s federal preemption and the state has the ability to manage insurance on a state level.
I just can’t see the average consumer getting more help from a federal agency than he can from a state agency. State regulation brings the controls nearer to the consumer. I think with federal preemption you prevent a fair approach to analyzing issues, and that’s what it’s all about.
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