When Eliot Spitzer was elected governor of New York, one couldn’t blame insurance carriers and brokers for fearing the worst from their old nemesis—who, as a crusading attorney general, had exposed bid-rigging, contingency fee abuse and balance sheet manipulation via finite reinsurance deals.
Much to the industry’s pleasant surprise, however, Gov. Spitzer, while at times offering tough love, was more helpful than hostile—acting decisively yet reasonably to solve a host of problems.
The first sign that Gov. Spitzer held no grudges was his appointment of Eric R. Dinallo as the new insurance superintendent.
Although Mr. Dinallo used to work with Mr. Spitzer investigating allegations of financial services misconduct, he was no enemy of the insurance industry. Indeed, when tapped for his new post, he was working as general counsel at Willis Group Holdings.
It was also clear early on that insurance was not going to be a regulatory backwater, as Gov. Spitzer in May signed an executive order naming Mr. Dinallo to chair a New York State Commission to Modernize the Regulation of Financial Services. Mr. Dinallo’s goal is to re-imagine what he characterized as an antiquated silo approach to regulation, given the blurring boundaries among the various industry sectors.
Beyond such blue-skies brainstorming, Gov. Spitzer and Superintendent Dinallo rolled up their sleeves and got right to work on a variety of pressing issues.
The duo made a big splash in March when Gov. Spitzer signed into law a workers’ compensation reform bill to fix what he called a “long broken” system. The measure was hailed by insurance lobbyists as a terrific first step, with details on implementation still being worked out.
Injured worker benefits were raised for the first time in over a decade—from a minimum of $40 to $100, and from a maximum of $400 to $500.
It didn’t take long for employers—facing some of the highest premiums in the country for some of the lowest benefits—to see a tangible payoff, as Mr. Dinallo ordered a 20.5 percent decrease in workers’ comp rates in September. That should translate to some $1 billion in savings for the 2007-2008 fiscal year for buyers, according to the insurance department.
In September, Mr. Dinallo proposed allowing open competition among carriers to determine rates instead of the Compensation Insurance Rating Board—the insurer association that now handles that task. However, he also wants CIRB to continue to collect and analyze the underlying data necessary for the rate-making process.