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On January 2, 2011, when Steve Poizner’s term as California Insurance Commissioner ends, a “Golden Era” of insurance regulation, post-Proposition 103, will likely also come to an end.
When Prop. 103 was narrowly approved in 1988, and then rewritten by the California Supreme Court in order to be upheld as constitutional, most of the attention was focused on the Draconian “rate rollback” it purported to impose, the “prior approval” rate approval system it created, the “take-all-comers” provisions in personal auto it enacted, and the barrier to bank sales of insurance it eliminated.
But one of the most important and far-reaching changes Prop. 103 brought about was one that commanded relatively little public attention or debate back then: Transforming the position of California Insurance Commissioner from being appointed by the Governor to being elected by voters.
The drafters of the initiative claimed that this change would make insurance regulation more responsive to consumer needs. But as is true of virtually every aspect of Prop. 103, what the drafters promised is very different from what consumers have received.
Since the first Commissioner election in 1990, Californians have had to endure one highly ambitious politician after another in the Commissioner’s suite; men—Republican and Democrat alike—who knew virtually nothing about the business of insurance coming into office, and appeared to regard the position as little more than a platform from which to pursue higher office.
There was little reason, frankly, to believe this trend would not continue when Mr. Poizner, a wealthy businessman and political novice upset then-Lt. Governor Cruz Bustamante to become Commissioner in 2007.
But Steve Poizner quickly demonstrated—despite most probably knowing little, initially, about the industry he was charged with regulating, and clearly having far greater political aspirations—that he would not follow in the footsteps of his distracted predecessors.
Early in his term, when wildfires swept through Lake Tahoe residential areas, Poizner was on the scene—comforting victims, implementing reforms to expedite claims payments, and reminding all consumers about their need to avoid being under insured.
Where elected predecessors have used the glare of sudden publicity to shamelessly pander to the cameras with hyperbolic industry attacks, Commissioner Poizner worked responsibly and effectively to increase consumer education, to cut governmental red tape that slowed claims settlements and payments, and to begin working on longer-term solutions to the problem of underinsurance.
Applying his expertise as a highly successful entrepreneur, the Commissioner implemented the first-ever “bottom-up” analysis of the operations of the California Department of Insurance, which resulted in reorganizations, transformation to “paperless” operations, and efficiencies that turned a $5 million structural deficit (when he assumed office) into a $50 million surplus, which permitted unprecedented reductions in licensing fees for broker-agents and insurers.
Early on, it also became clear that Mr. Poizner plainly understood the essential services provided by insurance broker-agents and the indispensible value that broker-agents bring to the California marketplace. He never had to be told that—it was something he had experienced first-hand as a small businessman whose early success was tied in no small part to the relationship he formed with his own insurance broker-agent.
Incredibly smart, hard-working, and motivated to do the right thing, Commissioner Steve Poizner demanded and received the very best from the very talented professional staff that populates and leads the CDI.
IBA West looks forward to working with California Insurance Commissioner-Elect Dave Jones as he assumes office on Jan. 3. Mr. Jones has demonstrated very high intelligence, and an impressive ability to get things done. And if he wants a superb role model in the job, Mr. Jones needs look no farther than his immediate predecessor: Steve Poizner has been—in our opinion—one of the best insurance commissioners California has ever had, elected or otherwise.