Former N.Y. Supt. Mills: State Regulation Has Holes to be Filled

February 15, 2007

Looking back on his two-year tenure, former New York Superintendent of Insurance Howard Mills says state regulation could stand some improvement.

According to the former Empire State insurance chief, the state regulatory scheme has certain strengths in the areas of solvency monitoring and consumer protection, but falls short in others areas.

“[W]e need to do a much better job on speed-to-market issues, on transportability of products, getting new products to the market quicker, enabling the industry to be faster in their innovation. That ultimately benefits the consumer,” he said in an exclusive interview with Insurance Journal before he stepped down from the post.

There is a need for more federal involvement in insurance regulation, claims the Republican, who since leaving office has joined Deloitte & Touche USA LLP as chief advisor with its insurance industry group.

“I do think that we need a greater role of the federal government in regulating insurance, so that we can move things like a national approach to dealing with natural catastrophes, dedicated CAT reserving, for example, and move issues of international consequence like the reinsurance collateral issue much faster than the state-based system has been able to deal with it thus far,” Mills continued.

Mills discussed his time in the regulator’s chair and lessons learned in the role in a video interview in Insurance Journal’s exclusive “The Commissioners” series, which presents interviews with 15 state insurance regulators. The complete video interview with former Superintendent Mills is

While state regulators should be more proactive in investigations, they might want to stay clear of another hot issue. Asked about pacts between his state and some large insurers that ban the payment of contingent commissions to all of those insurers’ agents and brokers, he offered that such issues should be settled not by regulators but by state lawmakers, who are likely to be more sensitive to the concerns of Main Street agents.

“We have had a position in New York, partly I think due to my experience as a legislator, that that is really an issue of such importance that we think that the legislature needs to weigh in. It is not something that I thought I should have done by regulation, just extending the ban on contingent commissions throughout the whole industry in New York. That is something the Legislature needs to weigh,” he told Insurance Journal.

He said that he appreciates the concerns of Main Street independent agents caught up in the scandals involving mega insurance brokers and he thinks lawmakers do as well.

“My sensitivity to the differences between the mega brokers and the Main Street brokers, the smaller brokers in upstate New York, is the reason why I didn’t just push from a regulatory point of view to extend the ban across the whole spectrum. I have that sensitivity as a legislator. I understand that the smaller businesses, the smaller brokers are different than the mega brokers. And that’s why I believe that deferring that to the legislature was the proper way to deal with it,” he said.

Among the lessons he learned while serving in the department, Mills cited “the absolutely critical role that the insurance industry plays in the global economy, our national economy, and in New York State. It is the underpinning of all economic activity.”

Gov. Eliot Spitzer has nominated Eric Dinallo to succeed Mills. Of the new administration, Mills said he believes it will work to strengthen insurance markets.

“I think that Gov. Spitzer certainly understands the critical role of the insurance industry. I am absolutely convinced that he has every intention of doing what he needs to do to create and maintain a strong market for insurance in New York State,” Mills said.

The complete video interview with former Superintendent Mills is available at www.insurancejournal/broadcasts, in the video section of the Web site.

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