Next New York Insurance Chief Could Have Political Bent
May 29 2009 - 2:40PM
Dow Jones News
At a critical time for insurers, the industry's key regulator,
New York Insurance Superintendent Eric Dinallo, is stepping down.
It's an open question who will replace him; industry opinion is
leaning toward a political pick.
The top qualification for Dinallo's replacement "will be
somebody who will help the governor get re-elected," said Andrew
Barile, a reinsurance consultant in Rancho Santa Fe, Calif. Barile
said that the insurance department's staff has extensive experience
in the industry, while the superintendent frequently has a
political rather than an insurance background.
Indeed, the announcement of Dinallo's departure was made not by
the Insurance Department, but by New York Governor David A.
Paterson, who faces a tough re-election fight next year.
The financial crisis has hit insurers nearly as hard as banks,
and several of the most troubled insurers are New York-based, which
means that the New York insurance office is the main regulator in
charge. Dinallo played a major role in American International
Group's (AIG) rescue plan. He also helped broker negotiations
between investment banks that owned mortgage-backed securities and
the bond insurers that guaranteed payments, such as MBIA Inc.
(MBI).
Dinallo and his predecessor Howard Mills both had political
experience, though Dinallo also spent some time as general counsel
for insurance broker Willis Group Holdings.
"The position is so high profile at this time it may go to a
more political" figure, said Peter Kochenburger, executive director
of the insurance law center at the University of Connecticut School
of Law.
A candidate with an insurance industry background might be
acceptible, but only from an insurance company "that has managed to
stay above this fray," he said, though a background as an insurance
executive might not make for a "great candidate."
Dinallo leaves on July 3, after two and a half years in the job,
to join the faculty of New York University's Stern School of
Business, and reportedly to prepare to run for New York Attorney
General.
A spokesman for Dinallo referred reporters to Paterson's office
for comment. A spokeswoman for Paterson's office said the governor
had not yet set a timetable for making a choice, and no potential
candidates have been mentioned publicly.
-By Lavonne Kuykendall, Dow Jones Newswires; (312) 750 4141;
lavonne.kuykendall@dowjones.com