LANSING — The idea isn’t to do more regulation, Kevin Clinton says, but to advocate for the growing financial services and insurance industries in Michigan.
The commissioner of the present Michigan Office of Financial and Insurance Regulation, Clinton told lawmakers that rather than act primarily as a regulatory agency and watchdog, the new department can better support the industry.
Gov. Rick Snyder’s intent through a Jan. 17 executive order creating the new Department of Financial and Insurance Services “is to put an emphasis on insurance and financial services.”
“They’re steady, good-paying jobs … and, I think, you’d like to grow this and one of the ways we can grow it is to try to stimulate economic activity,” Clinton told the Senate Banking Committee.
“As a regulatory agency (OFIR), our sole purpose is really regulation. But as a department, I think we can be advocates and we can try to initiate change, as opposed to just sitting back and regulating,” said Clinton, who will become director of the Department of Financial and Insurance Services when the transition occurs in March. “We can really be advocates for change that can really help the state grow in the insurance and financial services industry and really take the lead on things if we see opportunity for growth and change.”
OFIR regulates health, property and casualty insurers; HMOs; banks; insurance agents; state-chartered banks and credit unions; and mortgage lenders and originators. The agency, now a part of the Department of Licensing and Regulatory Affairs, transitions to its own department March 17, 60 days after the governor’s executive order.
The change has been viewed positively among advocates for the affected industries.
“We are good with the change,” said Rick Murdock, executive director of the Michigan Association of Health Plans. “They should have been a single department years ago.”
Spending on health insurance alone in Michigan totals some $60 billion, Murdock notes.
Pete Kuhnmuench of the Insurance Institute of Michigan, an industry trade association, likens the move to the state Department of Agriculture and Rural Development’s role in not just regulating but promoting Michigan’s $91.4 billion agriculture and food industry.
Kuhnmuench believes a new department can play the dual role of regulator and industry advocate without any conflicts of interest. Doing so requires “separate and distinct” sides of the department.
“You make sure people play by the rules and if they don’t, do something about it. But at the same time, you want your industry to thrive and be healthy,” he said. “We’d love to see a proactive approach (by the state) to growing our industry.”
The insurance industry in Michigan employs 50,000 people and pays about $257 million in state taxes on premiums, according to the Insurance Institute of Michigan that represents property and casualty carriers. The state is home to 160 insurance companies and the industry pays an annual average salary of $62,000.
Likewise, John Llewellyn of the Michigan Bankers Association said his only concern with the change is that the new department doesn’t become an advocate of the industry at the expense of its oversight role.
“We want a fair regulator, not a cheerleader,” said Llewellyn, the association’s vice president of government affairs. “You want to make sure they’re doing their number-one job and they’re doing it in a safe, reasonable, courteous manner.”
Otherwise, he said, “it is a good idea.”
One potential for the department is to emphasize greater financial literacy. Clinton told lawmakers he’d like to create new outreach efforts such as public seminars on financial literacy.