MR. EXCITEMENT GOES TO NEW ORLEANS

Rough Notes, Feb 2005 by Hennosy, Kevin P

By adopting the model law approach, the NAIC seems doomed to respond to any future findings from Spitzer or others on an ad hoc basis. The association's leadership has committed the membership to a responsive role where events govern their actions.

From this commentator's viewpoint, this responsive role reflects Weatherford's approach to administration. During her tenure, the NAIC has focused more on keeping state jurisdiction for insurance regulation, rather than fostering effective and efficient insurance regulation. It has all been what the English used to call, "too clever by half."

The association's elected leadership consists of a relatively small number of commissioners. For the most part, the rank-and-file commissioner does not ask many questions about how Weatherford runs the NAIC. Some believe that the membership should not meddle in administration, and others simply do not care.

Rubber stamp

The NAIC Internal Administration Subcommittee is supposed to provide membership oversight of staff budget issues. That's not how it works. Senior staff runs the show.

The subcommittee consisted of seven members in 2004, and three of those members were the elected national officers. As is the case with many associations, the process of attaining a leadership position tends to indoctrinate NAIC officers to the senior staff's point of view.

Where those viewpoints diverge, Weatherford holds at her disposal perks that can reward good behavior. For example, she can influence or control who represents the association on overseas junkets or speaking engagements at resort properties. The message to commissioners is clear: "Play the game and see the world."

Staff

Still, Mrs. Weatherford has to know that she faces internal discord among the NAIC staff. A Secretary of State might say she has "lost the confidence of her staff." A Secretary of Defense might see a corporate insurgency. As a writer, I can attest to the fact that the staff leaks information like the proverbial sieve.

There also have been, during the last year, some anonymous written attacks on the NAIC administrative leadership, including allegations of accounting irregularities and other administrative misappropriation. Another document surfaced-again from an unknown source-purporting to be the copy of a corporate credit card statement belonging to an NAIC administrative official, along with allegations of personal use of the card by the official.

Without the power to audit the NAIC's books, no one can judge the validity of these charges; however, it does not take a management expert to see these attacks as a danger signal.

There are signs that Weatherford understands there is a problem. In the autumn of 2004, regulatory and business sources told Rough Notes that Weatherford applied for the Chief Executive Officer position at the Property and Casualty Insurance Association of America. The position went to South Carolina Insurance Commissioner Ernst Csiszar, who left his term as NAIC president to take the job.