Insurance Power Plays: The Role of State Commissioners and Your Coverage

Published Date: 09/10/2024

Insurance Power Plays: How State Commissioners Shape Your Coverage

When most people think about insurance, they picture their agent, their premium, or maybe a claim they’ve filed. What they rarely consider is the architecture behind the system — the laws, regulations, and leaders who decide what insurance companies can and can’t do.

In a recent episode of Insurance Hour, host Karl Susman explored one of the most overlooked but powerful institutions in American insurance: the state insurance commissioner.

These commissioners sit at the intersection of government, business, and consumer protection. They oversee the solvency of insurers, approve (or deny) rate filings, and enforce fair claims practices. In many ways, they determine how smoothly — or painfully — insurance works in your state.

Susman broke it down clearly:

“The insurance commissioner is basically in charge of all things relating to insurance in your state. They steer the entire industry in one direction or another.”

Let’s unpack how these commissioners come into power, what they do, and why understanding their role can help every policyholder become a more informed consumer.

The State-Based System: A Legacy of the McCarran-Ferguson Act

Insurance is one of the few major industries in America regulated almost entirely at the state level. This arrangement stems from the McCarran-Ferguson Act of 1945, a federal law that granted states the authority to oversee insurance operations within their borders.

“The states decide what they’re going to do,” Susman explained. “Each state has its own Department of Insurance — sometimes it’s called the Department of Finance — but somewhere in every state bureaucracy, there’s a division dedicated to regulating insurance.”

That state-centric model creates a unique patchwork of laws and priorities. While the federal government handles banking, securities, and pensions, each state’s insurance commissioner sets the tone for local insurance practices.

Elected vs. Appointed Commissioners

Not all insurance commissioners come to power the same way. According to Susman, nine states currently elect their commissioners directly:

California, Georgia, Kansas, Louisiana, Mississippi, Montana, North Carolina, North Dakota, and Oklahoma.

In those states, the commissioner answers directly to the public. Voters decide who will oversee the insurance market, approve rate increases, and manage industry compliance.

“If you live in one of those states,” Susman said, “you have an insurance commissioner that’s there because of you, the voting public. You put them there.”

In the other 41 states, commissioners are appointed by the governor or another high-ranking official.

Each system comes with trade-offs:

Elected Commissioners: The Pros and Cons

• Pros: Greater accountability to voters; increased transparency; consumer protection often prioritized.
• Cons: Political pressure can distort regulatory decisions; campaign financing may influence oversight.

Appointed Commissioners: The Pros and Cons

• Pros: Professional selection can favor expertise over politics; less pressure to make populist decisions.
• Cons: Reduced public accountability; potential for industry-friendly appointments.

“There are pros and cons to both,” Susman observed. “Elections can make insurance political — but appointments can make it insular.”

When Politics Meets Premiums

Insurance shouldn’t be political — but it often is.

Some commissioners take a consumer-first approach, pushing for strong protections, strict rate controls, and aggressive enforcement against insurers. Others favor a market-oriented approach, emphasizing deregulation, competition, and carrier flexibility.

Susman cautioned listeners not to fall into the trap of assuming one side is always right.

“Liberal commissioners are often seen as the ones providing the most consumer protections,” he said, “and conservative commissioners are seen as the ones giving insurers more leeway to do business. But that’s not always true. Every commissioner is different.”

In practice, the best commissioners walk a fine line — balancing the needs of consumers for affordable, reliable coverage with the needs of insurers to operate profitably and sustainably.

“It’s a tough job,” Susman admitted. “You’re dealing with multi-billion-dollar companies on one side and the public’s financial safety on the other.”

California: A Case Study in Commissioner Leadership

California, home to one of the largest and most complex insurance markets in the world, provides a vivid example of how different commissioners can shape an industry’s direction over time.

Susman walked through the recent history of California’s insurance commissioners, outlining their priorities and legacies:

• Ricardo Lara (2019–present): Known for launching the Sustainable Insurance Strategy, the most sweeping reform effort in over 30 years. Lara’s initiative aims to modernize regulations amid rising wildfire risks and market instability.
• Dave Jones (2011–2019): Focused on expanding healthcare coverage and enhancing consumer protections.
• Steve Poizner (2007–2011): Strengthened auto insurance regulations and promoted transparency.
• John Garamendi (2003–2007): Advanced earthquake insurance reforms and established groundwork for the California Earthquake Authority’s modern policies.
• Harry Low (2000–2003): Oversaw significant workers’ compensation reforms.

Each commissioner, Susman noted, left a unique mark on the state’s insurance ecosystem — and each faced challenges that reflected the economic and environmental realities of their time.

“Every commissioner is focused on something,” Susman said. “They all have a signature — what they’re remembered for. And that shapes what insurance looks like for the rest of us.”

Why the Commissioner’s Role Matters to You

It’s easy to assume the insurance commissioner’s job only affects companies — after all, they regulate solvency, licensing, and rate filings. But their influence extends directly to consumers.

Here’s how:

1. Rates and Premiums – Commissioners approve (or reject) insurers’ requests to raise rates. Their philosophy determines how much you pay.
2. Claims Practices – They oversee whether companies handle claims fairly and promptly.
3. Market Stability – Commissioners help maintain a healthy balance between competition and solvency.
4. Consumer Protection – They mediate complaints and enforce disciplinary actions against insurers and agents who violate laws.
5. Disaster Preparedness – In catastrophe-prone states, commissioners guide how insurers must plan for and respond to large-scale events.

“They’re not just bureaucrats,” Susman emphasized. “They’re guardians of the public’s trust — and referees for one of the biggest industries in America.”

The Economic Weight of Insurance

Insurance isn’t a niche business — it’s a massive engine of economic activity.

In California alone, Susman noted, more than 300,000 people work directly for insurance companies. That doesn’t even include independent agents, brokers, and adjusters — the professionals who connect insurers with policyholders.

When you add them, the industry’s total footprint expands dramatically. The result: insurance touches nearly every household, business, and government operation.

That’s why the commissioner’s balancing act — ensuring companies remain solvent while protecting consumers — is so vital.

A Delicate Balancing Act

So how does a commissioner “walk the line”?

By understanding both sides:

• Insurers need flexibility to price risk accurately and invest in resilience.
• Consumers need protection from unfair pricing, poor claims handling, or sudden non-renewals.

Commissioners serve as mediators between public interest and private enterprise. Too much regulation can drive insurers out of the market. Too little can lead to predatory practices or financial instability.

California’s current crisis — where multiple carriers have paused writing new home policies — illustrates this tension vividly.

“That’s why it’s not an easy job,” Susman reiterated. “A commissioner has to manage the economics of the industry and the expectations of millions of policyholders.”

Beyond the Commissioner: The Network of Insurance Oversight

Susman also reminded listeners that the commissioner’s office is part of a broader ecosystem.

Every state has a Department of Insurance (DOI) or similar regulatory body. Within it, specialized divisions handle:

• Licensing and continuing education for agents and brokers.
• Financial solvency monitoring for carriers.
• Market conduct examinations and consumer complaint investigations.

The DOI doesn’t just react to crises — it proactively shapes market standards, conducts audits, and enforces compliance.

“It’s a whole machine,” Susman said. “The commissioner is the driver — but there are hundreds of people behind the wheel keeping the engine running.”

Why Consumers Should Pay Attention

Most consumers couldn’t name their insurance commissioner — yet their decisions may have more immediate impact on your wallet than those made by Congress or the White House.

When your premiums rise, when your claim is denied, or when your insurer leaves the market, it’s often the state commissioner’s policies that determine what happens next.

That’s why Susman encouraged listeners to stay informed and engaged.

“If your commissioner is elected, vote,” he urged. “If they’re appointed, pay attention to who your governor is putting in that seat. Because that person is making decisions that affect you every single day.”

The Bottom Line: Oversight with Impact

The role of state insurance commissioners may seem abstract, but their work shapes the very foundation of consumer protection and market stability.

They ensure insurers keep promises, maintain reserves, and treat policyholders fairly. They regulate rates, monitor solvency, and respond to crises that ripple through homes and businesses alike.

And while each commissioner’s philosophy may differ — from pro-consumer activism to market-driven reform — their collective mission remains the same: to safeguard public trust in an essential financial safety net.

“Insurance is a big business,” Susman said. “It touches everything — homes, cars, health, business. And somebody has to make sure it all works.”

That “somebody,” in your state, is the insurance commissioner. Whether elected or appointed, liberal or conservative, they hold the power to protect your coverage, stabilize your market, and define how fair insurance really feels.