The Commissioners: Jane Cline

Jane L. Cline was first appointed West Virginia Insurance Commissioner in January 2001 and reappointed by current Gov. Joe Manchin. In addition to her responsibilities as Insurance Commissioner, Cline serves as Secretary-Treasurer of the National Association of Insurance Commissioners, as well as vice chair of the Management Committee of the Interstate Insurance Product Regulation Commission. Before her appointment as insurance commissioner, Cline operated a government consulting firm, Jane L. Cline & Associates. Cline previously served as commissioner of the West Virginia Division of Motor Vehicles and as a former deputy commissioner of the state’s highway department.

During January’s NAIC meeting, Cline spoke with Insurance Journal, as part of a series of interviews with 15 state insurance regulators. The complete video interview may be viewed at www.insurancejournal.com/broadcasts.

IJ: What are the issues that are important to West Virginians when it comes to property and casualty insurance?
Cline: With respect to property and casualty, we have faced many challenges in recent years. We had the challenge of the medical liability crisis and worked with our legislature and governor to do insurance and civil justice reform. Ultimately, we ended up establishing a physician’s mutual insurance company; a West Virginia based company that now insures over half of our physicians. Most recently, effective Jan. 1, we approved a 10 percent rate reduction. They also took a 5 percent rate reduction last year. Their financials are doing well and that is a positive for our state. We have also worked on other insurance reform. We had a problem with affordability and availability in personal lines and companies were not writing new business.

IJ: For property?
Cline: For homeowner’s and for auto, we had companies that stopped writing in some instances, companies that limited their writing. So working with Gov. Manchin in January of 2005, we began to work with our legislature. We were able to do additional insurance and civil justice reform, which resulted in immediate rate reduction in auto for many of our consumers. And companies are now writing business again and offering new product filing, so that is a good thing for our consumers.

IJ: What about workers’ compensation? Have you had some problems in that area as well?
Cline: West Virginia has had significant problems with respect to workers’ compensation. We were a monopolistic fund that had a significant unfunded liability. Employers were being asked to pay for the sins of the past and that was a drain on the employer’s fund.

It was also a detriment to economic development because industry would look at our workers’ compensation system and the rates and choose not to locate in West Virginia. So, Gov. Manchin, in January of 2005, right after he took office, called for a special session and we moved to privatize workers’ compensation. That has resulted in our establishing a West Virginia Employers Mutual, which now supplies the workers’ compensation coverage. That company became licensed in January of 2006 and we were able to give some rate relief to employers then.

And now we have moved to the NCCI (National Council on Compensation Insurance) class system and we are able to provide an additional 15 percent rate reduction, so they have seen a 25 percent rate reduction.

We are working on being able to open the market to other commercial carriers in July of 2008. We have been meeting with various industry groups to talk about the reforms and changes in our workers’ compensation system so we can encourage competition in that arena.

IJ: Do you see encouraging insurers to expand in your state as part of your job?
Cline: I do, and the reason I do is because the more competition you have, the more innovative products you have, the better the consumers or the businesses that are buying commercial insurance, that are looking for worker’s compensation insurance; the more opportunity they have to shop and find products that meet their needs. It also helps in the affordability aspect as well.

IJ: What is your pitch to insurers when trying to bring them in?
Cline: [M]y current governor, my legislature, and my staff have worked very hard to address industry concerns and industry needs, and tried to level the playing field so they could understand what their risks were going to be, and be able to price that right so they could compete and do business in West Virginia.

IJ: Are there any other problems for other commercial lines in your state? Commercial property?
Cline: We did have commercial property problems, as well, at the same time that we were experiencing the problems with personal lines. So the civil justice and insurance reforms that we did went towards addressing commercial lines as well. We had a lot of problems with nursing homes having available products and commercial auto. So, some of the same problems that we had in the personal lines and the medical malpractice were impacting commercial lines as well.

IJ: What will be your department’s priorities be in this coming year?
Cline: For the upcoming year we will continue to focus on the responsibilities we received through the privatization of the workers’ compensation system and continue to prepare and ready the marketplace for the opening and allowing other commercial carriers to begin offering that type of coverage. We also have the responsibility for the old funds. The legacy claims run off so that’s the primary focus for us as well.

IJ: I’d like to know about your relationship with independent agents. Do you meet with them or how do you keep the doors open?
Cline: We do meet with the independent agents, in particular the big guys, in our state. We meet with them on a regular basis. If I do not attend their annual meeting my general counsel or my deputy commissioner does. We try to have staff present and we have an open door at anytime that they want to schedule a meeting to come in and talk to us. We encourage them to do that and oftentimes prior to that we meet with them prior to the legislative session to talk about what we’re looking at as far as an agenda for the upcoming session.

IJ: How do you perceive the renewal of the federal Terrorism Risk Insurance Act and its importance to your state? Would you consider it important to West Virginia?
Cline: I do think it’s important to all of the states because even though we’re generally speaking, a small population state and a small geographic state compared to a number of states, we still have some major chemical plants, and some major infrastructure … major different types of infrastructures in place. So, I do think it’s an important consideration.

IJ:What about other federal programs like a national catastrophe plan? Do you think that might be a good idea?
Cline: I’ve been following that issue and continue to be informed on it. When it was before the NAIC committee, we did vote in favor of the resolution because in talking with my neighboring states and also in talking with states like Florida on the issues and the challenges that they’re facing. I think it’s important that we as an association address that issue.

IJ:If you were to have more funds for your department, where would you spend the funds?
Cline: Actually, I’m in a fairly unique position right now and there has been a lot of focus on my agency and the six years that I have been there. And working with industry and working with the legislature, we have been able to get budget increases to address staffing needs and technology needs. So, we’ve been a fortunate agency with respect to that.

IJ: What do you consider your agency’s strength at this time?
Cline: Well, I think that we’ve made strides in recruiting capable staff. For example, when I arrived at the department we did not have an actuary, we did not have an economist, we did not have any CFEs. So we’ve worked on obtaining people that have the appropriate designations to help us have the expertise to be a more effective regulator.

IJ:What role have you taken in the last six years with the National Association of Insurance Commissioners? My understanding is that you chair the workers’ compensation task force.
Cline: Right.

IJ: What other issues are you involved in?
Cline: We’ve been very involved in the implementation of the Interstate Compact. We were one of the very first states to pass that legislation and have been working very closely with any ICC staff in other compacting states. I have actually just recently have been elected to be the vice chair of the Interstate Compact and we have shared the interim rule making committee of the Interstate Compact.

IJ:Do you have any views of appointed versus elected commissioners?
Cline: Actually I’m happy to be an appointed commissioner. I think running for office is a very difficult thing. I have campaigned for people and I think it’s much easier to campaign for people than it is to go out and try to sell yourself. I’ve had good support from my current governor and appreciate the opportunity to work for him.

I think it often helps that when you’re part of the executive branch and you’ve been appointed that you have different type of relations sometimes with the legislature and the governor.