Christina Urias sees her role of new director of the Arizona Department of Insurance as a balancing act.

“My goal is to protect the consumer on one hand, but to encourage the economic development of the insurers on the other hand — to create a balance, to do what’s fair and right, recognizing both sides.”

Ms. Urias, who was appointed to the post Nov. 3 by Governor Napolitano, emphasizes that the “primary focus of the department is to assure financial solvency of the insurers that do business in our state.” She explains that insurance companies pay the claims, which helps consumers, which in turn helps the economic growth of Arizona businesses.

“I see myself creating a healthy balance between the two,” Ms. Urias says.

From 1989 until her appointment to the Insurance Department, Ms. Urias was a partner in the local law firm of DeConcini McDonald Yetwin & Lacy, P.C., where she developed an insurance defense practice and did pro bono work.

She’s proud of her pro bono efforts, which resulted in the Arizona Bar Foundation in 1997 honoring her for her “outstanding volunteer legal services to the community.”

Soon after obtaining her law degree from the University of Arizona in 1988, Ms. Urias was a clerk for then-Arizona Supreme Court Chief Justice Frank Gordon. “He’s my mentor,“ she says. From 1973 to 1985 she worked in the insurance industry as a property and casualty claims representative.

Insurance 101

On the job for nearly five months, Ms. Urias says she has no major changes in mind at the Insurance Department. Although, she says she is exploring the possibility of establishing an outreach program targeting teenagers and senior citizens.

“I think the most vulnerable populations are the youth, those teenagers who really want to learn how to drive right now, but don’t know enough about insurance, and the elderly,” Ms. Urias says. “I want to make sure that they’re protected, that they have the information they need.”

She plans to call her outreach program “Insurance 101,” conducting presentations at high schools, senior centers and community centers. “One of my goals is to get a program like that started,” Ms. Urias says. “The department hasn’t done that for those two populations.”

She adds that the department produces several consumer publications and offers surveys and other insurance information on the agency’s Web site. “What I want to do is expand on that,” she says. “It puts a good face to the department. My goal is to do as much as I can in that regard.”

Even with her background in insurance, Ms. Urias concedes she has a lot to learn. “Regulation is a different side of the law,” she says. “I was a trial lawyer for almost 15 years. Trial lawyers see problems after the fact, and are involved in clean up and resolution. I view the regulator as seeing problems before the fact, acting as a prevention.”

With that in mind, Ms. Urias spent her first months in office getting up to speed on insurance-related legislation and making herself known to legislators. Her confirmation hearing has yet to be scheduled, probably before the Senate Finance Committee, chaired by Sen. Dean Martin, R-6.

She says she had an interview with Senate President Ken Bennett, R-1, and met with Mr. Martin. “I’ve gone down there [to the Legislature] a few times to introduce myself,” she says.

Charitable Annuities

The only bill the agency is promoting is H2228, which requires a charitable organization that makes an agreement for a charitable gift annuity to have at least $300,000 in cash or the equivalent, to be in operation for at least three years, and have audited financial statements available to the public. The bill also requires that the charitable organization make certain disclosures about its operations and prohibits the payment of commissions.

A charitable gift annuity is a contract in which a donor transfers assets to a charity and the charity agrees to pay an annual annuity to the donor. When the donor dies, the remaining principal is paid to a designated charity.

“It adds more disclosure requirements for those selling charitable gift annuities,” Ms. Urias says. “Some agents and producers were taking advantage of people and there was a fraud investigation. It [the bill] is moving along at a good pace and there’s no opposition.” The Insurance Department is working with the Securities Division of the Arizona Corporation Commission on H2228, she says.

H2228 passed the House 59-0 on Feb. 10, and cleared the Senate Finance Committee 9-0 on March 1 and the Senate Commerce Committee March 17. As of March 24, H2228 had cleared Senate Rules and was placed on a consent calendar.

The Arizona Corporation Commission in a July 2003 press release noted that while most charitable gift annuities are sold by reputable groups, “the Commission has observed a growing problem with this type of investment.”

For example, in July 2003 the ACC obtained a $4.3 million settlement against a Scottsdale firm and two local men who sold fraudulent charitable gift annuities to elderly investors. Maricopa County Superior Court Judge Kenneth Fields ordered Wealth Management Resources Inc. of Scottsdale and the two individuals to pay $4,357,140 in restitution and $90,000 each in civil penalties. The ACC recovered $1.4 million of the investor funds.

The court also found that the firm received more than $1.3 million in commissions, which was about 30 per cent of the amount invested in the annuities. The investors were not told about the commissions. The court also found that the investors’ money was placed in speculative investments, including timeshare units in Yucatan, Mexico.

Licenses For Agents

Another bill, H2232, which would extend the term of licenses for insurance agents to four years from two and double the licensing fee, is supported by the department.

The bill is sought by the Independent Insurance Agents and Brokers of Arizona, headed by Lanny Hair. “It will save some money for the state and still gives us same quality oversight on producer licensees,” Ms. Urias says. “It’s an efficiency, cost-saving measure. It’s good for the producers because it reduces their frequency in dealing with the department.” H2232 breezed out of the House 57-0 on Feb. 16, and received a 9-0 do-pass recommendation from the Senate Finance Committee on March 15.

Charging Co-Pays

Another bill the agency is tracking, S1382, removes the ceiling from the amount of co-pays and reimbursements insurers may charge. Asked if this measure passes will consumers wind up paying more, Ms. Urias says, “Well, yes. It’s almost a cost-shifting device, but it allows insurers more diversity to offer different plans and benefit options.”

Key sponsors are Sen. Carolyn Allen, R-8, and Mr. Martin. “We want to raise some concerns,” the director says, “perhaps about how they’re going to handle mandated benefits that are otherwise required in the statutes. I expect some amendments to make sure changes in that bill address the mandated benefits issue.”

The Senate passed S1382 by a vote of 27-0 on March 1, and it is awaiting a hearing in the House Financial Institutions and Insurance Committee.

Although the Insurance Department is not directly involved in an effort to expand Healthcare Group, an AHCCCS program for businesses with 50 or fewer employees, Ms. Urias says her agency is providing technical support and background information at the request of AHCCCS Director Tony Rodgers. The bill, S1166 provides for the creation of as many as four different health insurance products, and the role of the Insurance Dep
artment regarding this bill, says Ms. Urias, is “to ensure the financial solvency of insurers doing business in Arizona.” S1166 won tentative approval in the Senate on March 18 and as of March 24 was awaiting a third reading.

Regarding the state’s health care appeals law, which went into effect in July 1998, Ms. Urias says some insurers could do a better job of explaining consumer rights. “They’re all doing what they’re required to do, as far as I can see,” she says, adding that no serious violations have come before her so far.

The agency’s newsletter for the fourth quarter of 2003 states that “insurer compliance remains a problem.” The newsletter goes on to state that the Insurance Department “continues to see substantive violations of the time frame and notification requirements, along with failure to provide timely and legible documentation when insurers forward cases” to the Insurance Department for external review.

“Most of my experience with insurance has been in property and casualty, so life and health is a new area for me,” she says. “It’s a big job.”

So big, in fact, that the agency assisted nearly 90,000 consumers in fiscal 2003 with myriad insurance questions and problems. And in calendar 2003, the Insurance Department reports helping consumers recover almost $4 million in denied claim settlements and premium refunds.

“We’re here to protect the consumers,” Ms. Urias says. “The goals between what the insurance company wants and what the consumer wants — they really complement each other. They’re not adverse to one another. A healthy insurance environment means there’s more competition and rates are better for the consumer. Our goal is to get that healthy balance.”

Why did Ms. Urias accept the job of insurance director and the responsibility for overseeing and licensing 91,000 insurance agents≠ The answer goes back to her years of working as an insurance claims representatives and dealing with lawyers on the defense and plaintiff side.

“I thought, I can do what they do, so I went back to law school,” she says. After earning her law degree and working for the DeConcini firm for nearly 15 years, Ms. Urias says, “I had in the back of my mind to become a judge. I applied to the Court of Appeals, made the short list, and had an interview with Governor Napolitano. Obviously I did not get it. But soon after that the Governor’s Office asked me to consider this position. So I did.”

It’s a different position than being on the Court of Appeals, she notes, but sees some similarity. “This balance between consumer needs and insurance needs — in a way that’s what a judge does,” Ms. Urias says.

“A judge looks at both sides of a story and decides what’s fair.”

Her biggest challenge≠ “First and foremost is the financial responsibility of the companies, to make sure that they remain solvent, and to help the consumers so they make informed choices about their insurance.”

The enthusiastic Ms. Urias says, “I’m really enjoying myself. There’s a lot to learn. I thought I was done with homework, but I’m not. It’s invigorating because it’s a new challenge.” —