Katrina Has Put
Mississippi’s Insurance Commissioner
By Perry Hicks- Special to GulfCoastNews.com 1/22/07
(Editor's Note 1/22/07: At the time of Perry Hick's interview, Dale had not made an announcement on seeking re-election. Dale announced after this story appeared to seek re-election)
Hurricane Katrina has taught America a bitter lesson: There can be no expectation for our national safety nets to see us through another major crisis. Virtually every system failed save those most criticized or discounted by the secular-progressive media; the military, faith-based relief and charitable organizations and the Left’s most hated retailer, Wal-Mart.
Mississippians in particular learned that local government couldn’t rise to the occasion because it was as victimized by the storm as its hapless citizens; the Federal Government couldn’t be relied on because of gross incompetence at FEMA; and the state government has proven unreliable by virtue of its partnership with the Federal Government in the grossly dysfunctional home owner grant process, not to mention an arcane system of separate policies for wind, flood, fire and theft.
It is no wonder then that George Dale has been subjected to harsh condemnation from frustrated policy holders since the days immediately following the storm. His recent publication of a proposed Policy Holder’s Bill of Rights has stoked the fire storm of criticism punctuated by the claim Dale is a “lackey” for the insurance industry.
When this allegation was put directly to Dale, he readily admitted, “I’ve heard that.”
However, the state and Federal laws that have created this insurance environment is not of Dale’s making. He is an elected regulator, not a legislator, and the realities of post Katrina have put him in an untenable situation of having to see to it as many claims can be paid as possible without destroying what is left of Mississippi’s insurance market.
In an exclusive interview with GulfCoastNews.com, Mississippi Insurance Commissioner George Dale tells why his commission developed the bill of rights, the narrow line he has had to walk since Katrina, some of the complexities of executing his job, and an intriguing answer to the question, will he run for office again
Policy Holder Bill of Rights
The Insurance Commission’s recent release of a proposed Policy Holder’s Bill of Rights has had detractors howling that the timing of the announcement was a publicity stunt designed to thwart Mississippi House Bill 1237, Mississippi Consumer Insurance Policy Holder Bill pf Rights.
Commissioner Dale’s critics have attributed the idea of a bill of rights to Long Beach resident, Kevin Buckel who had discovered that both Texas and Florida have them. Frustrated, Buckel is reported to have taken the issue to one of the authors of HB 1237, Diane Peranich (D-Pass Christian.)
Dale: What we did is we got news emails from this citizen requesting an insurance bill of rights. Frankly, when it first started I didn’t know what an insurance bill of rights was- simply because I felt like a insurance policy is a contract between two parties, and that contract is supposed to be honored. So, when we continued to get these numerous emails, and I looked at the possibility of some type of home owners/ policy holders bill of rights.
What I did I instructed two of my attorney general lawyers to research this issue and come up with some recommendations, which they have done. We took some parts of the bill of rights from Maryland, Florida who have passed policy holder bill of rights. We looked closely at Florida’s bill of rights because they the same issues and pretty much have the same companies doing business in their state. However, we went beyond what Florida enacted. Our bill of rights is more stringent than Florida’s.
So we spent a great deal of time reviewing not only what other states have done but also what some Mississippi citizens- including Mr. Buckell- were saying they needed. Our bill of rights was for the purpose of making it easier for policies to determine what was covered and what’s not covered and things such things as that.
Some of the bill of rights that have cropped up that I have seen copies of, their whole purpose is pretty well to punish the insurance industry; to put some guidelines on me as commissioner of insurance that other politicians do not have to abide by as regarding campaign finance and some other issues. But ours we think is to be helpful. Ours is issued in a bulletin form before it can- will go into effect. We will have a public hearing on the 26th of January and anyone who wishes to speak to our proposed bulletin will be allowed to do so at that time. And then we will take those considerations in house and see if we need to make any additional changes to ours and file with secretary of state and go forward.
The consumer would have the right to receive in writing the reason for any denial or non-renewal of coverage. I have had people call me and say, they are not renewing me and I don’t know why. Well, I think the consumer is entitled to a written reason why… to receive a written notification dealing with any change in the coverage. Now, a lot of these things are written in a policy, but what this bill of rights will do would put it in a more noticeable area of the policy where they can understand…that’s been some of Trent Lott’s remarks he’s made publicly that insurance policies are too much googly-goop and are too hard to understand.
…they (insurance companies) have to give a written explanation why a policy claim is denied in whole or in part… the policy holder would have the right to request and receive from the insurance company any adjuster reports, engineer reports, statement of documents which are not privileged documents that the insurance company prepared, had prepared, or used during the adjustment of the claim. I think that is far reaching right there. And it does many other things… like requiring that there be a place where it is indicated in the bill of rights the policy has to have what’s covered and what’s not covered and refer the page in the policy that that is done.
GCN: Why is the phrase, “Right to request” used?
Dale: Well, because there was some misunderstanding from people, particularly on the Coast, that had their claim denied, and the wanted to know why is was denied and felt like the insurance company owed them that information as to what reason they based that on, and I think they are entitled to it and should have it and this bill of rights requires it.
We have had some indication that… insurance industry… will oppose some things in the proposed bill of rights.
GCN: Why would a Bill of Rights be necessary?
Dale: It is something that adds to the opportunity for the consumer to better understand what his policy covers and does not cover. They have purchased a contract from an insurance company and that contract works both ways.
Prior Attempts at Legislation
Dale: In the past, we have attempted to do some of these same things through legislation that has not passed. In fact, we sent to the legislature in 2001 a proposed bill that would set forth some standards in paying some property claims called the Unfair Claims Settlement Act that was not acted upon. Last year, I sent a bill to the legislature that would require all property and casualty agents to have 3 hours of continuing education in flood insurance training every three years and that did not pass.
My dealings with the legislature, they are well intended, but sometimes it would be easier to issue a bulletin yourself rather than go through all the checks and balances of the Mississippi legislature.
Post Katrina Reality
Dale: My responsibility after Katrina was two fold: One, to try to get as many claims paid as we could; and we have worked at that- $11.9 billion has been paid out, understand that. Some wasn’t paid , I understand that. The second responsibility is to try to maintain an insurance market on the Coast when people begin to rebuild, keeping in mind that unless there is an insurance market on the Mississippi Gulf Coast, the Coast can’t rebuild.
That second responsibility is probably more difficult than the first. But I realized that it was going to be difficult and so that is the reason I chose not to get on the public forum and call insurance companies names and blast companies and make charges and whatever that I may or may not could have substantiate because I knew when all that was over I had to go to the companies, as I have done… and encourage them to write in the state of Mississippi.
In a prior GCN interview with insurance industry spokesman, Bill Bailey, brother to famed attorney F. Lee Bailey, made it crystal clear that insurance companies would not put up with the same kind of public bashing from a small market insurance commissioner that they would from large markets such as Texas or Florida.
One of Dale’s most admirable qualities is his forthrightness. When it was suggested that he did not have the regulatory weaponry necessary to harm insurance companies, his response was immediate and corrective in tone.
Dale: Any filings that a company does with the State of Mississippi, their financial condition, and those things that lead up to making a determination, if there was someone here that wanted to do an awful lot of damage to the insurance industry it could easily be done. That is the reason the person in this job has to be objective for the insurance companies and for the consumer and it causes me to walk a very delicate line between the insurance company and the consumer.
One of the major things people don’t understand is that as Commissioner of Insurance, I am a regulator, not a legislator. I cannot make laws for the insurance companies to follow that is done by the Mississippi legislature. My job is to carry those laws out, which I do.
One of the laws is to see that that the insurance companies are solvent… that is an ongoing process that we do. We have some powers to do market conducts of insurance companies which we are doing right now- and have done over the years… We’ve fined companies and made them take corrective action on certain things but I have not chosen to blast that all over the papers. We have revoked the insurance licenses of more agents than anybody in the history of this office. I’ve only on 2 occasions ever put out a press release on revoking an agent’s license whereas I get documents all the time from my contemporaries throughout the country that have press conferences to announce about revoking agents licenses. I’ve not chosen to do that so, a lot of people misunderstand what I do and what this office does.
Value of Mediation
Dale: I’ve said before, if this office had the authority to make a company pay an insurance claim, and the public knew that I had that authority, as an elected commissioner of insurance, whose claim would ever be turned down?”
So what do we do? We issue 15 bulletins regarding the paying of claims, evidence to be used in paying of claims, and direction on how to pay claims to make it be done promptly. In fact, our 5th bulletin we issues was the guts of the recent State Farm case in which the judge ruled on behalf of the consumer; that bulletin spoke to the issue that if the insurance company cannot determine that if it was water, and was not sure how much of it was wind, they were to pay the claim.
I would imagine it would be appealed for a number of reasons but that is not the decision that I would make. The only thing about that case that right after that we received 3 calls from people that were scheduled to go to mediation that withdrew… I guess basing it on the fact that I want to go to court and get the full value of my policy and 2 million dollars worth of punitive damages… but mediation gives them something in their pocket today as opposed to 10 years down the road… they got to remember that a lot of people won millions and millions of dollars of the Valdez oil case in Alaska, but if you go back and check how many people have money in their pockets today, years after that judgment was given- they don’t have anything.
So, we need to seek other alternatives along with court cases to bring about a resolution, and that is what we are attempting to do with our mediation process.
Question of Running Again
Dale: I am going to have to make a decision probably this month. I’ve given myself a deadline for saying something this month. I owe it to everybody to announce my intentions and I plan on doing it within the next two weeks.
When asked if he had made a decision in his mind Dale said, “Probably so.”
GCN: Is there anybody waiting in the wings that could replace you?
I am sure there is; I don’t know who, I couldn’t name that person. I don’t know who would may or may not run. All I know is somebody asked me a few weeks ago who is thinking about running against you if you run. I said nobody that understands what this job does.
It is but on the other side of that, what if you are a person that has no hobbies, have never done anything but work, in fact still maintain more than one job simply because you just enjoy working? Just to do nothing would be the worst thing in the world. Every time we have a holiday during the winter, whenever it is dreary weather and raining, and whatever, I say, would this be retirement? I don’t want this. So, even if I didn’t run, there are several things out there I would want to look at, but don’t know if any of them would give me more satisfaction and challenges than this office.
The powers that be that were whenever I ran for this office- the insurance industry were lined up behind other people and I ran as an outsider and was lucky enough to be elected as an outsider, and so I would be a little reluctant to try to pick people who ought to run for this office… There probably would be some people more qualified than others to be in this office… I would hope this would be an office would not be politicized.
Whoever spends the most money can get elected and where they get that money from- this whole issue of how much it costs to run campaigns has gotten out of hand including this office.
One of the proposed bill of rights I think has something in there that if a person takes any money from the industry they regulate- speaking of this job- is criminal and even has some prison terms; I think that goes a little too far.
I would hope that anyone who comes after me would abide by the many bulletins that this department has issued. I don’t think the bulletins are the person, the bulletins are the office…
Dale: I enjoy being insurance commissioner. I am beginning my 32nd year. I have been through many, many disasters; many, many very delicate situations and we’ve over come a lot of those and moved forward. I am one of the people that got an opportunity to do what I always wanted to do since I was a child, and that’s be in politics, and so most my adult life has been in politics or public service and I have thoroughly enjoyed it- enjoy this job. But I’ll have to admit, situations that have arisen, no later than this morning, when the Sun Herald makes a front page article of some things that I really don’t think are very objective- that I have to deal with those type things on a regular basis- it really questions why does somebody need- why does anybody want to serve in politics… You want people to be objective in what they report…but I love politics and I’ll feel better Monday; but you just have to overcome one obstacle after another to try to reach the goal of trying to serve people. I very well understand why a number of people who have been nominated to serve as Federal judges or Federal appointments or whatever and what the hassle they go through to be able to serve… Many politicians, not just me, but others, asking themselves, why do I want to be in politics. But it is a great profession, I love it dearly, and I sure don’t intend on quitting any time soon.
Approved Non-admitted Companies
It has been reported to GCN that insurance companies in Florida have formed “shell” companies to service the market segments these same insurance companies have refused to write. GCN asked if it was too difficult to establish a new insurance entity even if it is owned by another insurance company.
Dale: It is. What they may be talking about is what we refer to as “surplus lines” or non-admitted carriers. These are companies that are licensed to do business here but are what we refer to as non-admitted. In other words, they’re not subject to the regulation of this department as it relates to rates, solvency and some other type things, but they are on a list…we know they exist but we have no regulatory authority over them. Whenever a market gets tight more and more businesses and/or individuals do business with these non-admitted carriers… All they have to do with this office is just register… if they go broke, there is no protection from the guarantee fund, they pay a 4% premium tax that is collected by really a quasi agency called the Surplus Lines Agency that doesn’t even exist in this office but their monies go into the general fund… exists in practically every state in this nation. It is a strange dilemma. The reason they exist is to write an apartment complex on the side of a hill or many cases a cotton gin. It is to write that business the regulated market doesn’t want to write. When the markets are soft- and you have ample companies- you don’t have these surplus lines companies, but when the market gets tight they come out of the woodwork. They’re legal, they just not regulated.
Whenever I get a call from a business owner on the Coast that has an opportunity to stay out of the wind pool by getting insurance through a non-admitted carrier, we tell them that’s good but know you are taking your life in your own hands. But at the same time, these companies are well run companies, most of them, and there is nothing to worry about. But that if the company should go broke, then they get no help from the guarantee fund and their outstanding claims wouldn’t be paid and they pretty well have their own liability on their own hands.
Louisiana probably has more surplus lines companies than anybody simply because of the oil fields business. Those derivatives of the oil field business is so volatile, that very few admitted carriers want to write that; so Louisiana lead the nation in the number of surplus lines companies doing business in their state.
That is probably what is happening to a certain degree on the Mississippi Gulf Coast with the 240 plus percent rate increase in the wind pool. For commercial, there have been less than 50 commercial policies that have been put in the wind pool since that rate increase went into effect. So, either one of two things are happening: 1.) the business are going nekid, or 2.) they are getting it through these non-admitted carriers. And I would probably guess that most of the businesses are getting it through the non-admitted carriers through their local agent.
National Insurance Regulation
Dale: I am on a task force chaired by Commissioner Kevin McCarty from the state of Florida promoting this “all perils” policy. Testimony has been given in Washington and other areas. On paper it sounds like a great idea but as the other day I called my friend the commissioner in Utah, he wasn’t impressed at all with it. You know, you people have chosen to live down there. You see, it would increase their insurance coverage. No later than yesterday, I got a call from a doctor in North Mississippi complaining because he felt like his insurance rates were going up… and he felt like it was related to what has happened on the Mississippi Gulf Coast and he was violently opposed to that.
That is what I deal with. It is a strange dilemma that I am probably one of the most lambasted and castigated public officials… but I am probably the biggest advocate right now of trying to make some inroads to help the people on the Coast.
GCN: “All perils” would be regulated at the national level?
Dale: Yes that’s correct. What you would do is require that insurance companies charge a little bit more for policies in Montana and Iowa… to cover earthquakes and floods in the standard home owner’s policy.
A Failure to Communicate
Like other old school Mississippi politicians of stature, Dale can be gentlemanly to a fault. Rather than take on the appearance of self-aggrandizement, he restricts his public communications. While this may have been admirable in normal times, under the duress of post Katrina reality, his modesty may have not served either his office or the public well.
Dale: I have never have been one to grandstand or do things for political purposes, I have just tried to do my job and hopeful the end results at the end of the day people will say maybe he did do the job. That has been pretty well my philosophy all these years. People have elected me 8 times and only once have I gotten less than 70 percent of the votes… this is my personality, this is the way I try to do my job and if it requires you to grandstand and all those things they can just get someone else in here.
When people think this thing through, they kind of realize well, there is not an easy solution. And that is what bothers me that if I walk away from this job, and don’t run, somebody will come in and will put simplistic answers to complicated questions and they don’t fit- and they will get away with it. But if I am in the race and make them explain how they going to do these things rather than just say I am for cheaper insurance rates or I am for making insurance companies write in Bay Saint Louis. That sounds good, how you going to do it? And make ’em explain that and make ‘em them give the full detail of how they going to do it. Then that may be the purpose I have in this race.
About the Author.....
Perry Hicks is the senior writer for GCN. He is a former Mississippi Coast resident and was a correspondent for the old Gulfport Star Journal. He has appeared on Fox News Channel. Perry has also hosted his own radio talk show on the auto industry with a mix of politics. Perry is a former college professor and a frequent contributor to GCN writing on stories of national importance with local interests. His articles can be found in the GCN Archive.
Contact the Author: email@example.com