I am not yet convinced that North Carolina can do without a commissioner of insurance. I am entirely convinced that we can do without an elected commissioner of insurance.
Let me explain. As an advocate of free markets, consumer choice, and personal responsibility, I’m not an easy sell on the notion that state government needs to regulate the insurance business. There are many, many financial-services companies that either sell insurance in North Carolina or who would wish to do so if existing insurers exposed themselves by charging excessive rates or providing shoddy service. If you total up all the life, property and casualty, health, auto, and other insurance products sold in the state, you’d end up with a staggering sum. Virtually every homeowner, and many renters, must purchase insurance. All drivers are supposed to. For businesses, proper insurance is as basic a tool of the trade as capital, labor, or intellectual property.
In short, a free and competitive market will deliver, over time, the best insurance people can purchase at the prices they are willing or able to pay. Contrary to the belief of some, insurance is not a sort of privatized welfare system. It is not designed to redistribute wealth. Rather, it is a means for a household or business to manage its own lifetime risk. It’s a service that consumers pay for, not a lottery ticket that most can reasonably expect to collect on (life insurance is a different sort of bet, of course). On average, the long-term contributions a policyholder makes to an insurance pool should be greater than benefits received from the pool (so as to cover the expenses and return on investment of capital invested by the insurance company).
That having been said, I find myself not in agreement that state government should exercise no regulatory oversight in the insurance field. While some believe that courts and legal action are a sufficient means of carrying out the state’s legitimate and critical role in protecting consumers from fraud, I don’t agree in this case. Because of the nature of insurance contracts — their complexity and the long-term nature of the promise to pay — I think that a true meeting of the minds can be difficult and that the potential for fraud is maximized. A post facto risk of being sued won’t do much to deter a fly-by-night operator from bilking subscribers. Thus I see some kind of regulatory office that ensures clarity of language and requires minimum financial disclosure to be appropriate.
Disagree with me if you want to, but surely we can agree that there is no justification for an entire Department of Insurance, headed by an elected commissioner, to regulate every facet of the business and approve every rate change. Unfortunately, that’s what we have. And in current Insurance Commissioner Jim Long, we have a long-serving Democratic incumbent who is going to be difficult to defeat in the November general election unless the GOP catches a pretty big political wave.
We’ve got a couple of Republicans out paddling on their boards right now. Robert Brawley of Iredell County is an insurance agent (Long is an attorney) with eight terms under his belt as a former member of the NC House, including lengthy service on the insurance committee. Not surprisingly, Brawley has attracted endorsements from a number of state legislators from the Piedmont and west. He says that Long has not managed the department efficiently and has ignored the need to bring “better competition” to the insurance market.
Specifically, as Brawley explained in a recent appearance before the Down East Republican Club in Beaufort County, the Department of Insurance hasn’t had a performance audit in 20 years and its regulators don’t allow rates to vary enough in relationship to risk. This deters insurers from entering North Carolina because “no business is going to work on a one-size-fits-all approach,” he said. Brawley’s website is located here, where you can read more about his biography and qualifications.
His opponent in the primary is Cindy Huntsberry, a Johnston County attorney who says she’s the “first woman ever to file for insurance commissioner” and “considers herself one of the most effective candidates in the race,” of which there are two. Huntsberry cites as issues the need for clearly worded insurance policies and prompt and fair claim payments. “This campaign is about the people’s right to fairly-priced insurance policies, plain-talk policies — insurance policies that people can read and understand, and getting legitimate claims paid in a prompt and fair manner,” she told the Lenoir News Topic a few weeks ago. “[Long] has been in power for nearly 20 years and the insurance situation in this state gets worse every year,” Huntsberry said. “Too many companies have left North Carolina. I will work to bring them back.”
She is also critical of the management of the department. “People call the insurance commissioner’s office now and get no response,” she said. “I don’t understand why, since his office has more than 400 employees.” Her website is here.
As long as North Carolina is going to have an election for insurance commissioner, I’ve got to recommend that voters study up on the candidates and issues. I’ll be looking for who talks most about removing state-imposed barriers to entry in the insurance market and focusing regulators on protecting consumers from fraud — not from their own self-imposed risks.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.