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Insurance Chief Answers Charges of Industry Bias

Texas Insurance Commissioner Eleanor Kitzman has been the subject of concerns raised by lawmakers and consumer advocacy groups. But she deflects the criticism, saying her focus is only on how to best serve Texas consumers.

Texas Insurance Commissioner Eleanor Kitzman, shown in the capitol office of state Sen. John Carona, R-Dallas.

Eleanor Kitzman has only been Texas’ insurance commissioner for a year, but her tenure in a usually obscure political post has already been marked by headline-grabbing controversies.

She has been at the center of at least three public firestorms — for removing consumer protections in health insurance rules approved by her predecessor, for attending a campaign fundraiser held by an insurance company, and for suggesting the Texas Windstorm Insurance Association should raise premium rates.

Lawmakers, consumer advocacy groups and the Texas Medical Association have expressed concerns that she is biased toward protecting insurance companies. Because she was appointed between legislative sessions, her appointment has not been confirmed by the state Senate, and a lawmaker is already calling for her removal.

But Kitzman, whose responsibilities include approving and enforcing the state’s regulatory insurance laws, says her focus is only on how to best serve Texas consumers. She says the knowledge and experience she has gained by working in the insurance industry for more than 20 years enables her to take a practical stance on how Texas regulates insurance.

“I have friends that work in the insurance industry, but that’s not how I make decisions,” said Kitzman, 56, emphasizing that hard facts and data are more important factors to her than personal relationships and personal philosophy.

Kitzman, who grew up in Texas, had wanted to be a lawyer, but she “kind of got sidetracked.” By age 18, she was divorced and raising a child.

“Even though I dropped out of high school after the 10th grade, I was a good reader,” she said, explaining that the combination of motivation, intellect and help from her grandmother in raising her son made it possible for her to attend night classes at the University of Houston and eventually earn a law degree from South Texas College of Law.

She said she entered the insurance industry by accident.

After working at a law firm with an insurance regulatory practice, Kitzman said “another door opened,” and she took several jobs in the insurance industry.

She was working in North Carolina when South Carolina deregulated its automobile insurance market in 1999. She saw the competitive market as an opportunity, moved and founded an insurance company. She sold the business when she became South Carolina’s insurance director in 2005, a position she held for two years.

After an unsuccessful campaign to be South Carolina’s lieutenant governor in 2010, Kitzman was appointed by Gov. Nikki Haley of South Carolina to the state’s budget and control board.

In July 2011, Kitzman was appointed Texas insurance commissioner by Gov. Rick Perry, replacing Mike Geeslin.

In October, Kitzman was accused by of “pay to play” politics for attending a campaign event held by an insurance company in Irving to raise money for Haley. Kitzman said she attended the event to visit with Haley, “a good friend,” and “if you held a gun to my head, I couldn’t tell you what insurance companies were there.”

Coastal residents became concerned when Kitzman advised the board of the Texas Windstorm Insurance Association, which providers insurance along the coast when private insurers are not available, to hire a third party to conduct an analysis on possibly raising premium rates territorially, depending on the level of risk to an area. Kitzman said the practice is common in the private market, but many coastal politicians and residents oppose such rate changes.

Windstorm insurance association premium rates are so “inadequate for the risk that they are assuming,” Kitzman said, that it exacerbates the problem of private insurers not wanting to write business along the coast. The solution must come from lawmakers, she said, though she gave no definitive answer on what the Legislature should do.

Then, state lawmakers began raising concerns after The Dallas Morning News published a scathing editorial on Kitzman’s decision to delay and alter rules adopted by her predecessor to tackle the issue of balance billing — out-of-pocket medical costs incurred by consumers when they receive services from a provider outside their health plan’s network.

To protect consumers from surprise medical bills, the balance billing rules backed by Geeslin required health plans to disclose online which medical providers were in their network and alert consumers when there was a substantial decrease in the number of contracted providers at an in-network hospital. The balance billing rules Kitzman proposed in July removed those consumer protections.

“There are many senators, Republican and Democratic, that are concerned that she’s a little too pro-insurance company,” said state Sen. Bob Deuell, a physician and Republican from Greenville. Deuell sent Kitzman a letter asking her to reconsider the removal of consumer protections in the balance billing rules, which he told her “were the result of years of legislation, stakeholder input, and negotiation.”

Kitzman said it was the insurance department staff’s judgment that she suspend and alter the previously adopted rules. And department staff removed the disclosure requirements because they “had another full year of experience, talking with people, thinking about it,” she said.

Although the disclosure requirements were “well-intentioned,” she said, “I just don’t believe that consumers, the average consumer is really going to be able to use that information in a meaningful way.”

Asked to explain the consumer protections in the balance billing rules she has proposed, Kitzman said, “the rule is not done, so we can kind of start and stop with that.”

Deuell, who chairs the Senate Nominations Committee, said Kitzman’s decision to remove the consumer protections could “absolutely” affect the Senate’s decision to confirm her appointment when the Legislature convenes in January.

State Sen. Wendy Davis, D-Fort Worth, wrote a letter to Perry’s office asking that he remove Kitzman from her post. Davis wrote that Kitzman has shown “a clear pattern of disregard for consumer interests in Texas, indifference to the will of the Texas Legislature, and a bias favoring insurance companies.”

Allison Castle, a spokeswoman for the governor’s office, accused Davis of “grandstanding.” In an email to The Texas Tribune, Castle said, “Gov. Perry expects the commissioner to continue working in the best interest of all Texans.”

Kitzman said her advice to lawmakers in the upcoming legislative session will depend “on what the specific issue is, but generally, I believe in very strong financial regulation.” She said creating a regulatory environment that allows insurers to make reasonable profits is the best way to protect consumers and produce a competitive market that forces insurers to strive for the lowest rates.

“I know there’s a lot of call for plain English in policies, that’s probably never going to happen,” said Kitzman, explaining that although insurance language is confusing for most people, it is the department’s role to translate that jargon for consumers and ensure insurers’ rates are not “inadequate, excessive or unfairly discriminatory.”

“No one elects us to do anything, and yet we have enormous power,” said Kitzman, recalling how she believed regulations created by administrators — like the position she holds now — were unconstitutional when she was in law school. She has since modified that view, but said, “I feel very strongly that we have only the authority granted by statute.”

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