When Republican candidate Jim Beck was asked during a pre-primary debate about the coziness between the insurance commissioner’s office and the industry it regulates, he didn’t shy away from the question.
“It’s as crooked as a dog’s hind leg,” he said. “The industry owns it, and it’s time the people owned it.”
But Beck, the Republican nominee to replace Insurance Commissioner Ralph Hudgens, quickly became the industry favorite after he beat the incumbent’s handpicked successor and won the GOP primary.
An Atlanta Journal-Constitution review of campaign disclosures shows people in the businesses that the office regulates, and those in related fields, have contributed nearly $400,000 to Beck’s campaign. Many of them had previously donated to the campaign of Jay Florence, whom Hudgens had backed to replace him.
Beck, the president of the Georgia Christian Coalition and a former Department of Insurance staffer, now faces Democratic insurance agent Janice Laws in the Nov. 6 election.
He said the fact that he largely self-funded his primary victory over Florence makes clear that he doesn’t owe anything to insurance industry donors.
“I think I am now in a good position to say, ‘I didn’t get here because of you, I got here in spite of you,’ ” Beck said, noting that much of the industry previously backed Florence. “They know and I know that the only people I owe are the voters.”
But those contributions have added to Laws’ massive disadvantage in the race. As of Sept. 30, the end of the last campaign finance reporting period, Beck listed having raised $1.9 million, about half from his own bank account. Laws listed $64,000.
That kind of disparity typically doesn’t turn out well for the candidate with little money, but Laws said it’s not unexpected.
“I am not surprised the industry is backing him,” she said. “He has been a lobbyist in the industry, he has worked for the insurance commissioner’s office, and he represents their interests. It’s always been that way. Insurance commissioners have been financed by the insurance industry.
“I want to be unbought, unbossed by insurance companies,” she said.
A key consumer agency
Insurance commissioners’ races get almost no attention, even though the agency is important to the pocketbooks of most Georgians.
The commissioner serves as the state’s fire marshal. The office regulates the small-loan industry and various forms of insurance. Its profile has been raised of late — and not necessary in a good way — by skyrocketing auto insurance premiums that have jumped for some consumers twice a year.
The AJC reported in 2015 and again in 2017 that premiums were rising faster in Georgia than almost anywhere else in the U.S. Increased traffic congestion, more distracted driving, an increase in accidents and the rising cost of fixing cars were among the problems cited, although at least some of the same problems are facing other states as well.
Hudgens also blamed a decade-old state law — which he supported when he served in the General Assembly — that he said ties his hands. The law allows companies to begin charging higher rates without state approval.
After rates rose in the late 1980s, the General Assembly changed state law so that the state’s insurance commissioner had to approve increases proposed by companies. The industry hated the law, and its lobbyists at the Capitol fought to change it. Lawmakers did.
Under the current law, companies can implement new rates and the insurance commissioner can merely review them to make sure they aren’t either “excessive or inadequate” to keep the company in business, and to make sure they aren’t discriminatory.
The definition of “excessive” in the 2008 law all but guarantees that if there are multiple companies selling insurance in the Georgia market it will be difficult, legally, to fight a big rate hike, Hudgens said.
But Hudgens, who has been a favorite of donors from the industries his agency regulates, has also been criticized by those who said he didn’t do enough to fight the increases.
“The present commissioner has let everybody do what they wanted to do,” said Carl Rogers, a former Republican lawmaker from Gainesville who has been in the insurance business for more than 40 years. “He believes in the free market, but it’s not free.
“They (the industry) have had a free rein for eight years.”
Rogers said it’s important for the next commissioner to be someone with experience in the industry, in all lines of insurance.
“It needs to be somebody who has been in the trenches, knows the business,” he said.
Carolyn Hugley, a Democratic lawmaker from Columbus and a State Farm agent, said, “What consumers need to be concerned about, what they should be asking candidates is, are you going to protect the marketplace such that we can have insurance rates that are fair and competitive.”
Laws is a native of Jamaica who lives in Coweta County and has been in the insurance business since 2002, running her own agency and selling coverage.
She has peppered speeches with promises to change the 2008 law, saying it “gives insurance companies a blank check” to raise rates unimpeded by state regulators.
“Georgia requires us to have automobile insurance, so it needs to be affordable,” she said. “Far too often, I have seen the needs of everyday Georgians unmet to protect the interests of the insurance companies.”
Hudgens said a key part of the job is to keep insurance companies solvent and have a competitive marketplace. Laws said that doesn’t preclude the commissioner from taking a stronger stance on rate increases.
Laws also wants to see the state create a government-subsidized reinsurance fund that would cover bills for high-cost patients, stabilizing the individual market for the rest of the customers. Alaska and other states have created similar funds. She said it would make health insurance more readily available and affordable, and give more insurers confidence they can make it in Georgia.
“We have an option at the table that has worked,” she said. “It’s not a radical idea.”
Beck is from Carrollton and served as deputy insurance commissioner under Commissioner John Oxendine and chief of staff for a year for Hudgens. Oxendine threw a fundraiser for Beck in June and has contributed $15,100 to his campaign. Beck also worked for Nationwide Insurance doing lobbying and public affairs. In the 1990s he was press secretary to Democratic Lt. Gov. Pierre Howard.
Beck said if elected, he would ask companies not to file any auto insurance rate increases for at least six months “so I can get my arms around the process.” In particular, Beck said he wants to look at the use of credit scores by insurance companies to help set rates, something that has been criticized by consumer groups. They’ve raised questions about why a low credit score should mean higher auto insurance rates.
Beck said he also wants to see what costs companies are building into their rate requests, such as pay hikes for executives or other expenses.
“I think the commissioner has the power to push back on rate increases,” Beck said.
Among other things, he wants the agency to hold public hearings when companies file for rate hikes so consumers can attend and hear the justification for increases. “Let’s do it in front of everybody, let’s stream it live … let’s not try to cover everything over a lunch,” Beck said.
He said he wouldn’t push to change the 2008 law if insurance companies are willing to work with him on his proposals. “If they give me six months (without rate hikes), I won’t be looking to change the law,” he said. “If I get in there and they aren’t working with me, that’s a different story.”
Beck agrees with Laws that the state needs a high-risk pool to stabilize health insurance rates, and he also wants to find ways to make the pricing of health care — how much procedures or drugs cost — more transparent.
“(Health) insurance is not accessible and not affordable for most Georgia families,” he said.
Beck campaigned over the summer with the cloud of a federal grand jury investigation hanging over him. The grand jury subpoenaed his state work records after media reports indicated that he held full-time state and private-sector jobs at the same time. Beck said he didn’t know what the investigation was about, and the U.S. Attorney’s Office has not released any information on the case.
In fiscal 2011, Beck made almost $113,000 as the deputy administrator of the Subsequent Injury Trust Fund and later as Hudgens’ chief of staff, according to state records.
He left the insurance job in 2012 and went to work for the Prosecuting Attorney’s Council as a victim-witness advocate, a job that paid less than $20,000 a year, while at the same time he ran the Georgia Underwriters Association, a state-created marketplace of last resort for Georgians having trouble obtaining coverage.
Beck told the AJC in April that he worked flexible hours, more as a consultant than a 9-to-5 employee for the state, and that his bosses were happy with his performance.
The Atlanta Journal-Constitution is covering the issues and candidates up and down the ballot in a busy election year. Look for more at ajc.com/politics as the state heads for the general election on Nov. 6.