Dean Cameron: I’ve been the Idaho insurance commissioner since 2015. I was reappointed by Governor Brad Little in 2019, and when he won re-election, I was reappointed again.
Previously, I was a state senator for 25 years and chaired many of the committees that involved insurance and banking. While I was serving as a state senator – and before that – I also served as an insurance agent.
As the National Association of Insurance Commissioners (NAIC) president, I was able to engage internationally on several issues, which allowed me to lead in areas. We tried to emphasise the importance of appropriate regulation of the industry of what we’re doing for consumers and why we must have insurance products. As regulators, we can lose focus on the goal, which is for the consumers to be protected. We worked on improved relationships which allow for collaboration with consumer and industry groups and legislative groups.
These opportunities have allowed me to get to know folks across the world and advocate for what I consider to be the appropriate level of regulation and involvement with insurance investments.
Dean: Citizens are better off when they're insured, and they're better off when they have access to affordable products.
We believe in the benefit of collaboration and communication between us and the consumer, and between us and the carriers and other legislative bodies. The consumer has to have confidence that they will be able to use that product – and that it will be there in their time of need. We're always looking for ways to improve access, and affordability.
All agencies in Idaho have been reviewing rules and regulations, and many of these rules and regulations are older than I am – and that’s pretty darn old. When you have a rule or regulation that's over 62 years of age, it may not be the most up-to-date or fully aligned with today's challenges and environment. For example, we didn’t have issues with artificial intelligence or big data in 1961 that we have today.
"If there is conflicting or confusing regulation, it’s difficult for the
carrier and harmful to the consumer."
We believe it's appropriate for us to ensure we're not requiring carriers to comply with provisions that are simply costing money, not providing adequate protections, or addressing solvency issues. People are better protected when the carriers understand and follow the rules. If there is conflicting or confusing regulation, it’s difficult for the carrier and harmful to the consumer. We also want to use our regulatory philosophy to attract carriers to Idaho. For example, we’ve doubled our health carriers in the past seven years.
Idaho is unique because a large area of the state is made up of forest or high desert plains – so we have our share of forest fires. We are listed in the top ten states for forest fires, actually. Most of those fires don’t burn structures because we’ve done a fair job in vegetation management. Unlike other states, we aren’t seeing extremely high insurance losses, because we don’t have as many structures lost.
Dean: Our main efforts now are to continue to collaborate and communicate with carriers on key issues they are facing. We also want them to understand our positions and why we have certain rules.
We are willing to consider changes but find ourselves defending our situation more often than I would like. The carrier will take the list of top five states with forest fires and automatically assume that we’re seeing extreme losses. We spend a lot of time explaining that’s not the case.
"The market is hardening, especially in the property casualty field. It’s more of a
challenge to keep prices down while assuring that companies are solvent."
A large focus next year will be the impacts of inflation and supply chain issues that auto insurers are seeing and how to appropriately rate for these challenges. We will also focus on the use of data – and privacy and artificial intelligence concerns – more broadly. We are trying to implement the relevant regulations into our statute.
The market is hardening, especially in the property casualty field. It’s more of a challenge to keep prices down while assuring that companies are solvent.
Dean: It starts with communication and relationship building. We meet with investment teams at carriers and try to make sure we can place faces with names. We want them to know we have good intentions.
"Our investment regulations are old. A carrier expressed our regulation was so
antiquated they were being harmed by not allowing alternatives."
We don’t expect to agree on everything. There will be places we naturally understand one another and places where we need to improve communication. Our goal is to establish a strong enough relationship so that when we disagree, we do so professionally. It’s also important that we remember to listen – so we can hear and mitigate carrier concerns.
For example, many of our investment regulations are older than I am. Recently a carrier expressed our regulation was so antiquated they were being harmed by not allowing alternatives. It took discussion, but we kept working and eventually we did adjust the regulation.
Essentially, it’s our job to make sure carriers are solvent while recognising that the investment choices and decisions of 1961 are different than those today.
Dean: The concerns change depending on the type of company, and not everything fits inside a neat box. For instance, a life insurance company might not be seeing the same inflationary issues a P&C insurer is seeing.
We generally have challenges with investment limitations and with interest rates, which have been quickly and substantially raised over the past year. The value of bonds and other interest-bearing products have been impacted.
Inflation is another concern. We need to ensure that carriers have enough capital to meet their obligations in this environment. Carriers will naturally go to their first instinct – which is to raise rates – so the challenge for regulators is to make sure those increases are justified.
It can be difficult to swallow, but we have to allow them to make appropriate adjustments. On the other hand, we must protect the consumer and make sure that rate increases don't become a fait accompli, or a self-fulfilling prophecy that forces good risk out of the marketplace.
Another challenge – particularly when it comes to data and artificial intelligence – is that, as we get smarter at identifying risk, we’re potentially moving further from the purpose of insurance, which is to spread the risk. We need to find a reasonable balance, which necessitates communication.
Ideally for us, if our carriers are starting to have an issue, they’ve self-reported or, even before that, they talk to us about: “this is what we're thinking of doing, what we want to do, and is this compliant with the law?”
"ESG poses some challenges. All of us want to protect the environment
and we want harmful issues in the environment to be mitigated."
We're also seeing a large number of affiliations – which can be good because they can provide cost savings as an affiliate becomes larger. However, they can also be challenging because those they are affiliated with may not have the same regulatory perspective that they had in the past. Again, that requires communication of a more recent issue, which is what carriers are having to do when it comes to ESG.
ESG, in my mind, poses some significant challenges. All of us want to protect the environment and we want harmful issues in the environment to be mitigated or eliminated.
But the role of the insurance industry is not to be the social conscience; the role of an insurance company isn't to influence communities in a particular political direction or to decide whom not to insure. It's frustrating that there are some that argue we need to force rates higher or that carriers should not insure certain entities because they are not meeting some social agenda.
Dean: Some believe we can't have a relationship with a carrier and regulate them at the same time, which is false. It ought not matter to us as long as the consumer is protected and we're helping the carrier follow the rules. We don't have to play “gotcha” for that to be effective. Our motto has been to be a flashlight rather than a hammer. We can be the hammer if we have to, but we prefer to be the flashlight.
Dean: Because every carrier might be different, when we speak with them about the decreased value of the bonds that they were holding, and we ask:
1) what are they doing to respond to the decrease valuation?
2) is that response appropriate and adequate?
3) does it affect their solvency?
We have tools in place, and we measure the risk-based capital (RBC) and look at those charges and investment limits.
If I were to give any carrier advice, it would be to collaborate and be transparent with your regulator. We want to be here to help you; come talk to us and be transparent and if we have questions, we'll ask them. We'll work on an appropriate strategy with you.
