Commissioners’ interactions with insurers extend far beyond the state capitals.
For five days in April, commissioners and their staffs convened for the spring meeting of the National Association of Insurance Commissioners. Gathered at the Sheraton New Orleans Hotel, just steps from the rollicking French Quarter, they were outnumbered by industry lobbyists and other representatives of insurance companies.
Some attendees from the insurance industry wore special NAIC badges featuring an ax symbol to advertise their status as ex-officials who once wielded the regulatory hatchet. While the NAIC declined to disclose a list of those with special credentials, the Center for Public Integrity identified 21 former commissioners from 18 states and the District of Columbia representing insurance interests.
One night, lawyers and lobbyists mingled with regulators at a cocktail reception sponsored by Locke Lord LLP, a law firm with a roster of blue-chip insurance clients. The event at Roux Bistro featured an open bar and buffet stations of crab cakes with roasted corn couscous and Cajun-dusted beef with horseradish cream.
While the NAIC has a conflict of interest policy for commissioners that bans them from accepting meals paid for by insurers at its conferences, such parties are specifically exempted because they are “open to all NAIC meeting attendees.”
The corporate closeness is hardly unusual. Emails obtained by the Center for Public Integrity show companies build relationships with commissioners through dinners year-round, sometimes including the regulators’ family members. But in nearly a dozen states the public may never know: Nine don’t require commissioners to file public disclosure reports, while another two do not consider food or drink for “immediate consumption” a gift.
In 2010, Nebraska Director of Insurance Ann Frohman thanked executives from Physicians Mutual Insurance Co. for a dinner outing during a NAIC meeting, though it’s not clear who paid for it. In turn, the company was effusive in its praise of the Nebraska Department of Insurance.
“I enjoy not only working with the NDOI as our regulators, but having you as friends,” a senior executive at Physicians Mutual wrote in an email. “The NDOI has done a tremendous job in representing the best interests of the insurance industry.”
Commissioner Frohman agreed, in an email chain that also referenced “hilarious” shirts and photos of the evening. “I couldn’t survive the [NAIC] meetings without having this time to look forward to,” she wrote back.
About eight months later, Frohman was working for Physicians Mutual, inviting her former colleagues to dinners and lunches while seeking to influence regulations.
The meals, while critical to building relationships, do not sway regulators’ decisions, Frohman said.
“There are folks in the industry I had dinner with as commissioner that I would not buy peanut butter from and others where there is mutual respect,” she said. “If a commissioner remains in the Ivory Tower and keeps a distance, he or she will be less than effective because work doesn’t stop at 5:00 p.m.”