The Commissioners

In January, Maryland Gov. Robert L. Ehrlich Jr. selected R. Steven Orr to serve as Maryland Insurance Commissioner, succeeding Alfred W. Redmer, who resigned in October 2005 to join the private sector.

Orr most recently served as senior vice president and chief information officer for the Universal Underwriters Group (a member of Zurich Financial Services Inc.), a position he held from 2000. Between 1982 and 2000, he was involved in the start-up and operation of businesses specializing in information technology systems and project management. His early career experience also includes several years of work in commercial banking with Mercantile Safe Deposit & Trust Company.

Orr’s appointment is for the balance of a four-year term from June 1, 2003.

In this interview with Andrew Simpson, one of 15 with regulators at a recent meeting of the National Association of Insurance Commissioners, Orr talks about his switch from the private to public sector and the priorities of his department.

You are relatively new on the job, as commissioners go. I’m wondering, first, how you made the transition from the private sector to the public sector and what you have learned about the insurance industry that you didn’t know?

Orr: This is my first time in the public sector; I’ve been in the private sector for over 25 years. I’m finding this very interesting. On the positive side, I love the people that I work with. We have an incredibly skilled and dedicated staff. On the negative side, I’m having to get used to politics, which is not my trump card.

So, that enters into policy-making, whether you like it or not?
Orr: Yes, it does. It’s a constant.

Several months ago, you faced one of these political events. Consumer Federation of America criticized GEICO, one of your domestic companies, for what they said were some questionable rating practices. I noticed that you came to the defense of GEICO. What was that about and why did you stand up so strongly?

Orr: The allegation from Consumer Federation of America was that GEICO was using education and occupation in its rating and underwriting practices, and as a result of that was unfairly discriminating against minorities. We took that charge very seriously because we do stand up for our consumers in Maryland, and a charge such as that is a very serious one.

I understood, or was pretty confident, when the charge was first made that it was not based on sound fact, and came to their defense both because they are a Maryland domestic and we regularly examine them. We most recently completed a full examination in 2005 and found no issues, and had examined occupation and education specifically a year earlier than that.

Furthermore, I came to GEICO’s defense because GEICO in Maryland, as well as in other states, has an incredible track record for driving down auto premium rates so that our consumers benefit. An example being, in New Jersey, in the 14 months they had been in that market, they drove down prices an average of $700 a person, and at the same time, generated a significant market share, from zero vehicles covered to 500,000. So we came to their defense.

I asked for a concerted, concentrated market conduct exam just around education and occupation, and we’ve just completed that. I reported back the findings, this morning, to my fellow NAIC members, and we have given them a clean bill of health.

Have you heard anything again from Consumer Federation of America?
Orr: I have not.

Your citizens have had their share of floods the past few years. As a relative newcomer to the issue of flood insurance and disaster preparedness, what’s your take on FEMA and the flood insurance program?
Orr: Well, this season concerns me. The forecast that we are told by the National Hurricane Center is a 66 percent chance of some kind of a major event along the east coast as compared to 33 percent last year. We are looking at that double likelihood, and I am looking at what I have learned from the experiences of Isabel in Maryland. We’re are being very proactive in reaching out to FEMA and reaching out to the Maryland Emergency Management Association and doing all that we can to plan and be ready should something like this occur this summer for Marylanders. We’ve published a very attractive and well-received guide, which is an insurance guide to natural disasters. I’ve lost track of how many of those we’ve handed out now, but they have been distributed to every municipality, to every legislator and also to consumers, as we travel the state getting out the message about insurance in general.

It sounds like disaster preparedness is among the priorities that you have set for your administration. What are the others that you are trying to accomplish?
Orr: Yes, it is. Health care is a major interest of mine, and I wish I could say, as we speak, that I have the answer to health care. I do not, but I am very interested and involved in the various dialogs around that. Within the state of Maryland, there are a number of us in policy positions that are addressing it and working on it. We are reacting to some of the positive momentum that the Massachusetts plan created and I think that there’s some good in store for us this year.

Is health coverage something you hear a lot of complaints about?
Orr: Yes. We do hear lots of complaints, but we are hearing more complaints from small business than from consumers themselves. It seems that every year, when renewal time comes, small businesses are being hit with 30 percent to 40 percent price increases, and that’s a heavy burden for them to bear and the impact on our consumers is that more and more people are ending up uninsured as a result, and we need to stem the tide.

Do you think a federal solution is in the offing for that, or advisable?
Orr: I think that there is a likelihood, or a definite possibility of a federal solution. I would prefer to see a coordinated state solution.

The medical malpractice market, in many states, has been up and down. What is going on in the market in Maryland these days? Have you heard from physicians; have you heard from carriers?

Orr: Yes, we have. We had a major malpractice issue a little over a year ago in Maryland and it was driven by the fact that doctors’ malpractice premiums had been rising rapidly. In Maryland, at that point, we only had really one carrier that accounted for virtually all the market share. I’m happy to report that since that time we’ve added another carrier to the market, and I think they’ll do a credible job of adding competition, and hopefully ultimately, easing the increase in prices.

What issues have you found yourself getting involved with through the National Association of Insurance Commissioners?
Orr: I’ve joined the Holocaust Commission Task Force, and I am enjoying working with them as they resolve outstanding claims payments for life insurance policies that relate to Holocaust individuals, years and years ago obviously. I’m also involved with one of the technology committees looking at web solutions to our interstate compact.

Overall, are you glad made the switch from the private sector to the public sector?
Orr: Yes, yes, overall. I am enjoying the challenge. I am excited about, hopefully, being able to make a difference.

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