COMMENTARY
How to Ensure That Insurers Choose New Hampshire First
November 2003
By Donald J. Pfundstein*
for New Hampshire Business Review
We
are all aware by now of the long-term economic problems associated with the
permanent shedding of jobs. Some would-be presidents have turned self-serving
expressions of concern into a new art form. In August, I suggested that the
conundrum we find ourselves in is how to create meaningful jobs when our success
in so many areas eliminates or minimizes the need for labor.
The first local news item I saw this morning announced further job losses
at our North Country mills. Reportedly, this is due to poor economic conditions
in that sector. Whether the latest round of layoffs is cyclical or not, there
is no question that many of the jobs we have lost will not be replaced.
Governor Benson’s selection to run the Insurance Department is doing
something about it. Commissioner Roger Sevigny has made no secret
of his efforts to make New Hampshire a destination for insurance
and other financial
services companies. He is doing so by effectively using the National
Association of Insurance Commissioners (NAIC) as a resource.
In June 2000 and again in July 2002, I commented that the NAIC was appropriately
working hard to assure that the “I” in NAIC stood for “insurance,” not “irrelevant.” In
short, I said then that insurance regulators needed to be relevant, focused
on what really mattered. Now the organization seems to be staying on task.
No, they’re not just listening to me. More people are starting to understand
what needs to be done.
In September, the NAIC adopted a final version of its “A Reinforced
Commitment: Insurance Regulatory Modernization Action Plan.” This comprehensive
plan to achieve uniformity of regulation across state lines recognizes the
global nature of the financial services marketplace, including the insurance
industry. The plan focuses on consumer protection, market regulation, speed-to-market
for insurance products, solvency and other matters.
Prior to getting the nod, then-Assistant Commissioner Sevigny was a vocal
proponent of the modernization of property and casualty insurance rating
laws. This speed-to-market initiative was a substantial step forward in making
New Hampshire an attractive destination for insurance operations. Currently,
the department is working on further modernization efforts. It is updating
the auto insurance regulatory framework, for one. This is another huge step
in the right direction.
The effort to achieve modernization is not simply of concern to those who
work with financial services companies. With a market of just barely 1 million
consumers, New Hampshire needs to be as innovative and efficient a regulator
of commerce as is possible. If perceived as an isolated and parochial, anti-industry
island, insurance company jobs will be located elsewhere. Let’s turn
the technology that eliminated the need for so many of our jobs into a job-creating
engine.
New Hampshire is a great place to live, work and raise a family. No question
about it. Technology enables us to live here and “work” anywhere
in the world. A modernized regulatory framework for providers of financial
services, including insurance, would help locate good paying jobs here.
Insurers, like other financial services companies, know firsthand the value
of efficient regulation. How do we get there? Regulators must
set out the broad parameters. Create a market where competition
is the day-to-day “regulator.” Regulate
for solvency. Don’t micromanage the business. Examine the companies
for compliance with the laws. Use goal-oriented, performance-based
compliance — not nitpicking technicalities. These market-conduct
responsibilities are
the future of insurance regulation. Also, rely on the expertise
of domiciliary states. If it’s not there, demand it be created.
If we have arbitrary laws, change them. If we need new laws, pass them.
Where our regulations need to be revised, let’s update them. We also
should explore what concessions, including tax accommodations, can be made
available for significant relocations to New Hampshire. What can be done
to make us more efficient, more responsive, more relevant to today’s
complex needs of doing business? If we take these steps and if we answer
these questions, we’ll get those jobs.
*Donald J. Pfundstein is admitted in New Hampshire.
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