State Insurance Regulators and Your Health Insurance Premiums

While appearing on a radio show last June, Ralph Hudgens, a candidate for Georgia insurance commissioner, thought the mic was dead when he said, “The insurance commissioner can’t do squat about health care.” (Hudgens won, although whether for his candor is unknown.) This month, newly-elected California state insurance commissioner Dave Jones is challenging Blue Shield, Aetna, WellPoint and UnitedHealth Group to delay their pending premium increases, suggesting that he feels his office can do squat. It got us to wondering exactly what power state insurance commissioners can wield over insurance prices and insurance laws. Here’s what we learned.

According to the National Association of Insurance Commissioners (NAIC), the organization of the nation’s insurance regulators, the bulk of insurance commissioners for the 50 states, District of Columbia and the five U.S. territories are appointed, typically by the governor (or the mayor, in the case of D.C.). Only California, Delaware, Georgia, Kansas, Louisiana, Mississippi, Montana, North Carolina, North Dakota, Oklahoma and Washington currently elect their state insurance commissioners.

Insurance commissioners typically head the insurance departments of their respective states. Their job description includes enforcing state insurance laws (but not creating those laws; that’s the job of legislators). They are charged with creating a healthy environment for insurers to operate in. Specific responsibilities vary from state to state, but can include licensing the insurance carriers, brokers and agents authorized to sell policies in your state, as well as the adjusters who deal with claims.

State insurance commissioners act as consumer advocates and educators, too. They investigate claims and complaints against the nation’s 7,869 insurance carriers. There were 322,000 official claims and 2.4 million inquiries in 2009, according to NAIC. Insurance commissioners may also approve insurance forms, receive deposits from title insurance companies and certify deposits or state investments in U.S. government bonds.

In their capacity as consumer advocates, state insurance commissioners have the authority to review requests for insurance rate increases and make sure they are compliant with state law. In most states, the insurance commissioners do not have the authority to reject those rate increases, but they can delay their enactment with a lengthy review process. And, with health care costs skyrocketing, that review power may bring state insurance commissioners increasingly into the media spotlight as regulators step up their scrutiny of rate increase requests.

Already, California’s Commissioner Jones has petitioned his state’s Assembly to give his position the right to reject increases outright. His initial effort failed, but armed with the pledged support of Health and Human Services Secretary Sebelius to help him “in any way that we can,” Jones has vowed to push for similar legislation later this year.


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