The Search for an Insurance Commissioner: Failed Design

The Search for an Insurance Commissioner: Failed Design

This blog was posted on Monday, April 25th. On April 29th, Governor Rick Scott and CFO Jeff Atwater agreed on a candidate for Insurance Commissioner, a better outcome than I had speculated about. The larger lessons I suggested we can draw from this experience are, I believe, still worth considering. SP

Gary Fineout’s story from AP Sunday, carried by news outlets across the state, presents Floridians with a remarkable and perhaps puzzling story.

The subject is the regulation of the insurance industry. The issue is who will be in charge.

Kevin McCarty is Florida’s current insurance commissioner. After 13 years on the job, and months after Governor Scott announced that he wanted McCarty out (though the Cabinet would not go along with removal), McCarty indicated that he would step down on May 2 of this year. Once you’ve lost the support of arguably the most powerful of your four bosses, it may be time to implement your exit strategy.

Since McCarty announced his plans in January, there’s been quite a bit of discussion in various quarters about who the next commissioner should be. Governor Scott has his preferred candidate; chief financial officer Jeff Atwater has his. As for the other two Cabinet members (who, together with the governor and CFO, must vote to approve the appointment of the new commissioner), no one seems to care.

Odd, isn’t it?

Actually, what’s odd is Florida’s Constitution on this point.

Today, there are four members of the Florida Cabinet. Together, these four elected officials wield a variety of pieces of executive power. It is, I think, one of the frustrations of those who serve as governor in this state that, in a number of areas, they actually are only one head of a four-headed executive hydra.

Of course, under normal circumstances, it would be possible for either the governor or the CFO to have his/her way by presenting a candidate that the agriculture commissioner and the attorney general would find more appealing than alternative candidates. 3 to 1 sounds like a win.

But not in Florida. Not when it comes to the insurance commissioner.

Under Florida law, the insurance commissioner must win the vote of both the governor and the CFO. The third required vote can come from either the agriculture commissioner or the attorney general.

Requiring that two specific members of the Cabinet agree reduces the power of the other two Cabinet members dramatically. It also creates the potential for enduring gridlock and crippled leadership in the regulation of the insurance industry.

Requiring that the governor approve reflects the notion that he is, after all, the governor, the chief executive and chief administrative officer of the state. To allow for the appointment of someone to the position of director without the governor’s support would substantially diminish both the governor and that director.

Requiring the chief financial officer to approve reflects the recognition that the director’s actions could have profound implications for the financial well-being of the state. Governors need not have particular expertise or experience in financial matters; CFOs usually do.

But requiring both means . . . well, that it just might be possible that no director can be selected.

We’re facing a similar dilemma with the continuing absence of a ninth U.S. Supreme Court Justice. But in that situation, there is a default position: whatever decision was reached by the lower court stands for whatever jurisdictions are under that court’s authority.

If McCarty actually leaves office May 2, there will not be a director in place. An interim probably will be agreed to, but precisely because the division over the choice of director is so serious, it is unlikely that the interim will be able to do anything more than hold the current course. That may prove impossible, or disastrous, if storm winds roil the insurance waters this hurricane season.

The current impasse reflects the “have your cake and eat it, too” philosophy of governmental design. It’s as American as presidential primaries.

We don’t want the government to be too powerful. We also want government to get things done . . . especially the things I want done (though not necessarily the things you want done).

In legislating and rule making, there usually are opportunities for creative compromises in language through which coalitions can be built. But when the choice involves the selection of a single individual to fill a particular office, opportunities for compromise are limited to the field of candidates presented.

And when two specific people, with different political agendas and different core constituencies, must agree on that one individual, there’s little maneuvering room left.

Hope for good weather!