With updates, quotes from Terri Vaughan and other reaction:
Former Nebraska Sen. Ben Nelson has been named CEO of the National Association of Insurance (NAIC), the organization announced today in a news release.
The move was widely anticipated and welcomed by many in the industry. Nelson has reportedly already met with top lobbyists and Washington insurance officials like the Federal Insurance Office, with whom he will be speaking a lot, to smooth the way, according to one source. Another says this is not the case.
“I am honored to serve as CEO during such an important and exciting time in the regulatory community,” Nelson stated. “After years in government, this is a homecoming for me. It is also an opportunity to advance the work of the NAIC to safeguard the insurance sector through the promotion of our outstanding regulatory framework. In my new role, I look forward to continuing our relationship with the Federal Insurance Office as well as working with state regulators on matters affecting the economy and consumers.”
Other candidates were said to include Michael Leavitt, Republican former governor of Utah and former head of the Department of Health and Human Services (HHS), which implements the health care reform act, as well as the Environmental Protection Agency.
Nelson also has another day job, as it turns out. National communications and public affairs firm Agenda announced just yesterday the addition of Nelson as a senior policy expert to the firm and the formation of an advisory board to support its public affairs platform and provide clients with high-level policy and political guidance, with Nelson and former North Dakota Gov. Ed Schafer hired as key advocates.
The NAIC said it does not see an issue with Nelson doing both jobs, filling both roles. Nelson will have clients on issues such as defense, sequestration and veterans issues. It is unclear how he will advise on any insurance, market finance, health or international trade issues if they arise among his clients. Two of the areas in which Agenda serves clients are healthcare field and with international and government issues, which clearly are in the NAIC's arena.
Agenda wants him for roughly the same reasons he stood out as a leader to the NAIC. “We are excited and privileged to have Sen. Nelson and Governor Schafer join our team,” stated Agenda partner Craig Pattee. “These guys reflect our business strategy. They know how to work across the aisle to get things done and understand the nexus between modern grassroots advocacy, governors and states and the federal government,” added Pattee.
“Senator Nelson’s impressive credentials and deep knowledge of state insurance regulation are simply unmatched,” stated Jim Donelon, NAIC President and Louisiana's insurance commissioner. “His rare and valuable combination of experience in insurance and government will be a tremendous asset to our organization. In addition to skillfully navigating the political arena, the stalwart leadership and collaborative nature that marked his time in public service will be integral to elevating our efforts on Capitol Hill. Moreover, as a former regulator and executive vice president of the NAIC, Sen. Nelson has a keen understanding of the insurance marketplace, which will make him an effective advocate for the preservation of our state-based system of regulation.”
“NAIC distinguished itself today by appointing one of the most respected figures in government as its new chief executive officer. Both from a professional and personal standpoint, I am delighted that Ben Nelson will rejoin the insurance community as head of NAIC," stated fellow former governor Dirk Kempthorne, president and CEO of the American Council of Life Insurers (ACLI).
The NAIC announced in August that then-NAIC CEO Dr. Therese M. (Terri) Vaughan would be retiring from the NAIC, something she had been contemplating for at least a year – according to sources, she was prevailed upon to stay on a year longer.
Many in Washington, on both sides of the aisle, interviewed over the past weeks when Nelson's name was floated around the Beltway have endorsed the choice already. People have called Nelson, a moderate who has served as an insurance commissioner and has a foundation as an insurance executive, a strong leader who understands the state system and who works well with others, is both pro free market and consumer, and can represent the views required in many forums.
Nelson will face federal regulatory pressure from many fronts, and consumer coverage issues and crises; deal with issue such as availability and affordability in the face of global warming, building safety; and must integrate national reforms and legislation with state regulatory system, while championing it at the same time. Dodd Frank Act and the Patient Protection and Affordable Care Act (PPACA) implementation mixed with state politics and resource issues loom large, as does flood insurance, fiscal issues and economic recovery.
Vaughan herself said today when asked, "I think it's a terrific choice. I am thrilled that the NAIC was able to get a CEO who has such breadth of experience in the industry and in public policy. He knows Washington, which is a huge strength, given the increasing importance of Washington politics these days. A wonderful choice."
Nelson, who voted for the PPACA, upset many of his more conservative colleagues and insurance industry folk in Nebraska for his support of the controversial act.
Prior to retiring from the Senate in 2012 after two terms, Nelson served as governor of Nebraska from 1990-1998. He also served as executive vice president and chief of staff for the NAIC (1982-1985); director of the Nebraska Department of Insurance (1975-1975); and executive vice president and then president/CEO of the Central National Insurance Group (1977-1981). Nelson earned his law degree, as well as undergraduate and graduate degrees in philosophy, from the University of Nebraska.
"We are pleased that the NAIC has selected such an extraordinary public servant with deep expertise in insurance, both as a regulator and as a longtime insurance professional...Sen. Nelson has been a proven, successful leader in the private markets, and in the public arena, in building consensus to help consumers. He has a deep understanding of the state-based U.S. regulatory system and how successful it has been in serving insurance consumers. As the NAIC faces complex issues of global and national regulatory convergence, his experience and background will be vital in navigating the landscape. We congratulate Sen. Nelson and we look forward to working with him in his new role," stated David Sampson, president and CEO of the Property Casualty Insurers Association of America (PCI).
Vaughan left the association earlier than expected, on Nov. 30 rather than the first quarter of 2013, and Andrew Beal became acting CEO for the second time.
Beal has been with the NAIC for 13 years and currently serves as the chief operating officer and chief legal officer. He previously served as interim CEO between Cathy Weatherford's tenure and Vaughan's assumption for the post, or about six to seven months.
The next CEO of the NAIC will be selected to “protect the state-based system that has served us so well for over 100 years,” said NAIC President-Elect James J. (Jim) Donelon of Louisiana in a phone interview last fall.
“It will take a special person to take us to the new level,” he said back then.
When asked what the next level referred to, Donelon had said, “My reference is frankly on Capitol Hill (both the Congress and the Administration) where the challenge is the greatest.”
That’s because of the emergence of the federal government in the insurance arena.
“We support it as necessary on the international level but we don’t feel it is appropriate for the federal government to take over or even further encroach on the success of state regulation going back over 100 years now,” the Louisiana insurance commissioner said.
Hiring the correct person is “vitally important for the preservation” of the state insurance system.
Earlier, Vaughan had cited family obligations and the desire to revise a father-daughter textbook—now in its 10th edition—as reasons for leaving the post that she has held since Feb. 18, 2009.
The NAIC CEO position, which used to have a disclosed salary, no longer does, as the NAIC is exempt from filing a public form 990 with the IRS.
In January 2008, the NAIC released pay information for top executives that stated Weatherford's salary at $370,000. The managing director of the Securities Valuation Office was the next highest paid at a base of $307,878, followed by Beal at $262,500.
The NAIC CEO salary has probably been bumped up a lot since then. The NAIC budget was then $68.3 million—the NAIC 2013 proposed budget before fiscals and the modeling of structured securities includes total revenues of $80.8 million and total expenses of $78.1 million.
Some have said Vaughan would be a tough act to follow—besides her NAIC experience, she served as the longest-serving insurance commissioner in Iowa history (1994-2004) as well as a past NAIC president and as a professor of insurance and actuarial science at Drake University. Vaughan also served on the board of The Principal Financial Group. She was also a member of the Executive Committee of the International Association of Insurance Supervisors (IAIS).