Wednesday, October 13, 2010

My AM Best Insurance Commissioner Phone Interview Struck PayDirt

Wow. Earned Media Time Folks.


I did a phone interview with the lovely Diana Rosenberg, Senior Associate Editor with BestWeek, a subsidiary of the AM Best corporation late last month and it's starting to show up in the insurance industry trades.


 I'm going to have to check, but I think there a typo in the estimates for the amount of money the insurance premium tax generates for the general fund, I'm pretty sure it's in the $400 to $600 million dollar range. 


Here's the complete article with links to my audio interview at the bottom. Mary Squires did one too so the readership is encouraged to give her a listen as well. Ralph didn't do one, probably too busy counting that $1,000,000 dollars in campaign contributions he's raked in.


Here's the post in all it's glory: 






Georgia Voters to Elect New Insurance Commissioner for First Time in 16 Years


October 11, 2010 | BestWire Services
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For the first time in 16 years, voters in Georgia will select a new insurance commissioner, with three individuals seeking the post being vacated by John Oxendine. Republican State Sen. Ralph Hudgens, Democrat Mary Squires and Libertarian Shane Bruce all pledge to work to improve the competitive marketplace in the state.
Oxendine, who in July failed to win the Republican nomination for governor, has served as the state's insurance commissioner since 1994 (BestWire, July 21, 2010).
"Competition is really important to me," said Squires, 52, a former lawmaker who served in both the state house and senate and now is the executive director of the Georgia Society of Professional Benefit Administrators. "With the economy the way it is, insurance is a wonderful service industry that is represented everywhere in the state. I want to make sure that Georgia is a risk management and finance hub."
Hudgens stressed that for the free market to thrive, business and consumers need an "evenhanded regulator." He has served in the state senate, where he has been chairman of the Insurance and Labor Committee since 2002. Hudgens, 67, endured a bruising primary battle, surviving a primary election in July with nine GOP candidates, and then winning a run-off election in August against Maria Sheffield (BestWire, Aug. 11, 2010).
Bruce, 53, wants to eliminate taxes imposed on insurance premiums.
This money is collected by the commissioner and sent to the general fund, he noted. "Unfortunately, the $4 to $5 to $6 million a year that Georgians unwittingly pay in this hidden premium tax roll into the general fund and get spent on things like pet projects for local legislators," said Bruce, a blogger who became more involved with the Libertarian party in 2008 after volunteering with the Allen Buckley campaign for U.S. Senate.
Bruce said the tax hurts Georgia's competitive marketplace. "I think this keeps a lot of companies from domiciling in Georgia and issuing policies in Georgia."
Insurers in Georgia are taxed on gross revenue from insurance premiums rather than corporate net income, according to a 2006 policy brief by the Andrew Young School of Policy Studies at Georgia State University. Both life and property/casualty insurers pay a tax of 2.25% on premiums to the state. In addition, property/casualty companies pay a 2.5% tax, collected by the state on behalf of municipalities and counties, while life insurers pay an additional local tax of 1%. The state tax rate is lower if insurers invest in qualified Georgia assets.
In addition, the policy brief noted most states have so-called "retaliatory-tax" laws, which require an out-of-state insurance company to pay whatever is higher -- the tax required by the company's home state or the host state's law. The brief concludes that "Georgia has an insurance tax environment which hinders the development of a domestic insurance industry" and that "removing the premium tax creates an incentive for current Georgia companies to grow as well as an incentive for out-of-state companies to consider redomestication to Georgia."
Both Squires and Hudgens have concerns about credit scores being used to calculate risk of a potential insured.

"Your credit score can be based on a number of things, whether you've been divorced -- which certainly has nothing to do with whether or not you can pay your insurance or what your rate should be," said Squires, adding that rates primarily should be based on an individual's actions such as driving record.
Credit scores can be useful when assessing risk, but regulatory oversight and safeguards must be in place, Hudgens said. "As with any relatively new risk assessment tool, credit scoring must be continually monitored to ensure that it is properly measuring risk, and that no one is being unfairly discriminated against."
Hudgens also is "deeply concerned" about the federal health care reform law. He co-sponsored legislation, signed into law, which prohibits forcing Georgia residents to purchase a health care product or be fined for refusing to buy health care insurance.
Bruce thinks Georgia has too many health-insurance mandates, noting it's the only state that mandates that every health care package must contain heart-transplant coverage. "That seems a bit extreme to me."
All three candidates pledged to aggressively handle insurance fraud. Squires pledged to establish a claims-enforcement squad to prosecute individuals and businesses that commit fraud or refused to pay legitimate claims in a timely manner.
To hear the full interview with Mary Squires, visit http://www.ambest.com/media/media.asp?RC=177780
To hear the full interview with Shane Bruce, visit http://www.ambest.com/media/media.asp?RC=178208
Posted by Shane Bruce at 8:39 AM

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