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Assemblyman Mike Villines,
IBA West posed the following ten questions to the Assemblyman Dave Jones (Dem) and Assemblyman Mike Villines (Rep), candidates for the office of California Insurance Commissioner. This week Assemblyman Villines sent back the following reply. We have not received a response from Assemblyman Jones but we will publish his reply when we do.
1. As you reflect on Insurance Commissioner Steve Poizner’s term, what things about him and his administrations would you emulate? How would you be different and what would you do differently?
Villines: Mr. Poizner was a strong consumer advocate but also worked hard to keep a vibrant and competitive market and that is important. One of the key barriers to expanding our market and the range of competitive products available to consumers and businesses is the length of time now required for licensing and approval of those products. I will pursue an aggressive program of regulatory reform, through options such as presumptive regulations and expedited approval of rate reductions. California consumers will benefit from having more choices that fit their needs and their budgets.
2. What would be your top priorities for your first year in office as Commissioner?
Villines: I will be looking at everything through the lens of how the Department can assist in restoring California’s competitiveness and work to create the conditions needed to rebuild our economy from the more than 1 million jobs we have lost in the recession.
I will complete a package of administrative actions and if necessary legislation to speed up the licensing of new insurance providers in our state. We need more competition and more consumer options in order to ensure affordable insurance.
I will convene a work group to identify “best practices” used in other states to keep workers’ compensation insurance rates low. Because of the 2003/04 reforms, California has dropped from 1st to the 13th most expensive state for workers’ compensation, but we need to pursue additional reforms that will keep rates low—and if possible reduce them closer to the national average—while ensuring that increased benefits will continue to go to affected workers and their families.
Through emergency regulations, I will institute a requirement that insurance providers indentify their top 3 most expensive cost drivers in any filings for an increase in health insurance rates. I will also convene a working group composed of insurance providers and health care providers to review this data and develop recommendations—regulatory changes, legislative changes, and research priorities—to tackle these items.
I will convene a working group composed of local law enforcement, District Attorneys, insurance providers, and health care providers to conduct a top to bottom review of the anti-fraud programs of the Department, and identify needed changes to conduct a more concerted and effective program to combat the insurance fraud that now adds $500 to the cost of insurance for every Californian.
I will invite the next Governor to have her Secretary of Health and Human Services to join with me in convening a task force of business, health care providers, insurance providers, and others to map out California’s response to the new federal health bill. The sheer scope and the prolonged schedule for a mass of new regulations under this bill threaten the stability, costs, and accessibility of California’s health insurance market for years to come. The state needs to be proactive in tackling this challenge, while ensuring a fully functioning private insurance market that offers businesses and consumers choice.
3. What is your personal experience, as a consumer, with independent insurance agents or brokers (if any)?
Villines: The work done by agents and brokers is critical for individuals and businesses. My relationship with my agent has been one of great trust and huge value. As a business owner, I had a very positive experience with the broker who ran our health benefits program and who we trusted to look out for our bottom line and the best interest of our employees.
4. Based on what you’ve learned during the campaign, what are consumers’ top insurance-related concerns and needs?
Villines: I think most consumers have the same needs – they need insurance they can afford, policies they can understand and coverage they can trust to be there when they need it. I believe the Insurance Commissioner can play a big role in helping to respond to these concerns by reducing the time now needed for licensing and product approvals, increasing competition in the market, and ensuring consumers have access to a range of affordable and available insurance products.
5. How, specifically, do you intend to attract new insurers and new capital to the California insurance marketplace?
Villines: The first step is cutting barriers to competition. A key competitive barrier is the length of time required to be licensed by the Department of Insurance—typically a year or more. Also, expediting the approval process to help companies get products to market more quickly, which can be accomplished, through regulatory streamlining that still retains the public hearing process, standardizing insurance provisions, and use of presumptive regulations.
6. Current prior approval rate regulations (which govern the rates that insurers can charge in most property/casualty insurance lines) include so-called “efficiency standards” that, in effect, disallow credit for legitimate expenses actually incurred by insurers in policy acquisition, and place independent agency insurers (because of the greater expense required to provide greater service) at a competitive disadvantage. Would you support eliminating or loosening the efficiency standard? Why or why not?
Villines: The test for me on this or any other proposal will be the extent to which they increase competition in the California market and provide greater choice for consumers and business. The rules should be flexible to reflect our current situation where insurance is now marketed through a range of options--from brokers and agents to internet based sales—each with a different set of services provided to consumers and businesses.
7. Would you support or oppose efforts to classify all insurance agents and brokers as “fiduciaries,” as a matter of law, to their customers?
Villines: My concern would be opening up new avenues for litigation and creating additional red tape at a time we should instead be focused on restoring the economic competitiveness of our economy and create jobs to replace and increase the over 1 million jobs that have been lost since the recession. I would also be concerned about what value proposals such as this add beyond the extensive disclosure requirements and informed consent provisions that already exist in law.
8. Should Congress create a so-called “optional” federal regulatory system for insurance companies? Why or why not? What specifically do you intend to do as Commissioner to ensure its enactment or defeat (depending on your view)?
Villines: My preference is that agents should be regulated by the states just as they historically have been. The insurance industry is unique in that it is a core component of each state’s economy and it is a critical element of their overall economic competitiveness. States should not surrender this authority to a federal government that has neither the expertise, capability, nor the range of interests the states now have in regulating this business.
9. There were a number of catastrophic workers’ compensation insolvencies in California following the repeal of the minimum rate law. In light of the fact that the Commissioner now has very little real authority over comp rates, and that loss ratios appear to be rising significantly, how would you ensure that that comp companies remain financially secure? What steps will you take to catch insurers in financial trouble early?
Villines: In contrast to my opponent who has joined or led several efforts to overturn the workers’ compensation reforms and reopen the system to new litigation, I strongly support the reforms and believe we need to build on them to keep rates low and California businesses competitive. Specific measures I would take include:
10. What should California voters understand about you and your candidacy before deciding how to cast their vote for Insurance Commissioner?
Villines: If I am elected Insurance Commissioner, I will begin working day one to create jobs and make insurance more affordable. I don’t view this job as a partisan position – Democrats, Republicans, Independents, etc., we are all consumers in California and people across party lines are agents, brokers and small business owners. I will represent everyone and I will work with businesses that follow the law so that they can be successful and in turn create jobs and a healthy, competitive market that ultimately benefits California consumers. I encourage all voters to go to my website, www.mikevillines.com, for more specifics on where I send on the key issues in this race.
Your Vote Could Make A Difference
The race for insurance commissioner is drawing more attention and getting much closer as the respective campaigns spend more money in the final days before the November 2 election.
Last weekend the California Chamber of Commerce's political action committee, JobsPAC, began running ads supporting Republican candidate Assemblyman Mike Villines. According to news reports, a handful of insurance companies (Liberty Mutual, Progressive, Mercury General and Allstate) contributed $1.5 million dollars to JobsPAC. The expenditures are intended to balance the fundraising by Assembly Dave Jones, the Deomcratic candidate who had raised nearly five times as Villines (approximately $1.2 million) since the June primary. Villines' had raised $213,000 according to the campaign finance reports.
IBA West is a non-partisan organization that works with all parties to promote the interests of agents and brokers and their clients. We urge you to become informed about the candidates and vote. Given the close nature of the race and the low voter turnout that is generally expected in a non-presidential year, insurance agents and brokers and their clients could have a significant impact on this race.