December 10, 2012
CORPUS CHRISTI — This year’s overseas trips made by state Insurance Commissioner Eleanor Kitzman reflect global interest in Texas’ coastal windstorm conundrum.
Kitzman, whose office provided a year’s worth of travel receipts in response to a request from the Caller-Times, traveled to London, England at the end of April and to Bermuda at the beginning of May, followed by a midsummer trip to Grand Cayman and a late September trip to Singapore.
The London trip was not paid for by state taxpayers because Kitzman was a featured speaker at an insurance industry forum. However, the commissioner confirmed she met with Lloyd’s, the global insurance giant, while in London from April 26 until May 4. Taxpayers paid $133 in taxi fares.
Bermuda cost taxpayers $2,311 that Kitzman justified as necessary to conduct face-to-face meetings with a laundry list of reinsurance companies. Bermuda is known in insurance circles as the “world’s risk capital,” according to her staff.
The commissioner, traveling alone, boarded a Delta flight to the tiny island about 1,000 miles off the North Carolina coast on May 16 and returned to Texas on May 20. In between, according to her expense report filed with the state and requests for further clarification on her activities, she met with more than a dozen reinsurance providers — several which currently provide reinsurance to the Texas Windstorm Insurance Association — to discuss plans for the Texas property and casualty market.
Reinsurance is what insurance companies buy to hedge themselves against catastrophic, unplanned losses.
“The meetings were highly productive as the reinsurance industry indicated it is ready and willing to continue participating in the Texas coastal property insurance market,” said department spokesman Jerry Hagins. “Reinsurance is a global business and reinsurers have lots of options for deploying their capital. The regulatory environment can be a factor in that decision-making process.”
Together with public bonds, reinsurance is a critical component of the windstorm association’s plan to raise the billions of dollars needed to pay claims after a storm strikes the Texas coast.
The association for the 2012 hurricane season secured about $850 million in reinsurance as part of its post-event claims payment plan.
Insurance Council of Texas spokesman Mark Hanna said Kitzman’s travel is indicative of the challenges and complexity of being the head regulator of a multibillion industry.
“These aren’t vacation trips,” Hanna said. “They are short, pinpointed with specific purposes and then, get on back to Texas.”
Hanna said Kitzman, a lawyer who before accepting Gov. Rick Perry’s appointment in 2011 was insurance commissioner in South Carolina, speaks the language and understands the business.
“She’s going and meeting face-to-face with the people who are calling the shots,” he said. “She’s one of the more knowledge commissioners we’ve ever had. She knows who she needs to see to make it work.”
As the face of the Texas insurance industry, Kitzman also must work with state lawmakers with whom she has sometimes clashed over what to do with the struggling windstorm association.
Hanna said Kitzman’s meetings also allow her to gain a feel for the global insurance marketplace and to bring that knowledge to bear when summoned by those same lawmakers to meetings at the Capitol.
“After all, she’s the one who has to appear before legislators and answer the tough questions,” Hanna said. “That’s what she’s trying to do — she’s doing her homework.”
In all, Kitzman filed more than $12,000 in state-paid travel receipts between mid-October 2011 and mid-October 2012 for meetings in places such as North Carolina, South Carolina, Washington, D.C., and up and down the Texas coast, including several meetings in Corpus Christi.
The state-paid tab pales in comparison to Kitzman’s industry-related travel funded primarily by the National Association of Insurance Commissioners. During the same period, Kitzman expensed more than $34,000 through the association for trips to meetings, speaking engagements and conferences in the United States and abroad.
Hanna said Kitzman’s involvement in the national association is valuable, as well.
“It gives Texas a voice at the national level,” he said.