Wednesday, August 7, 2019

California Insurance Commissioner and Applied Underwriters

I've written in the past about how a Berkshire Hathaway owned Workers Comp insurer, Applied Underwriters, has sold some types of policies that are, essentially, incomprehensible in the details of how premium charges will be ultimately calculated. Incomprehensible to many of the folks who bought the damn policies, at any rate.

California insurance regulators finally yanked on the leash of Applied Underwriter's Equity Comp program, as did some other state regulators. But more recently, California's new insurance commissioner and his staff took steps to undo some specific actions against the insurer. And that has created some rather negative news coverage of the commissioner.

It turns out, you see, that this newly elected insurance commissioner took some significant campaign contributions from Applied Underwriters. Oops.

The entire situation does call into question the wisdom of electing insurance commissioners, given the ability of the insurance industry to influence elections with significant campaign contributions.

Of course, appointed insurance commissioners often have very significant ties to the insurance industry as well, so this is a problem that is yet to be solved, I fear. Stay tuned.