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Insurance commissioner candidate: Adam Hamm, Republican

Adam Hamm was appointed insurance commissioner Oct. 22, 2007. A Jamestown, N.D., native, Hamm is a graduate of the UND School of Law. After graduation, he worked with the Cass County State's Attorney's office, prosecuting crimes such as murder, r...

Adam Hamm was appointed insurance commissioner Oct. 22, 2007. A Jamestown, N.D., native, Hamm is a graduate of the UND School of Law. After graduation, he worked with the Cass County State's Attorney's office, prosecuting crimes such as murder, robbery, rape and child abuse.

In 2002, he went into private practice with the law firm of Anderson and Bottrell in Fargo, where he was a commercial litigation attorney.

Q. When you look back at your career, what are you most proud of?

A. Three things pop into my mind. The first is working hard to expand competition and the number of choices people have for health insurance in North Dakota. That's a "behind the scenes" thing you do as the insurance commissioner in terms of encouraging health insurance companies to start actively marketing business.

I and the department have been working to encourage other companies to compete for health insurance business in North Dakota. It's my hope that within the next four years, we can get four, five or six other national health insurance companies to come into North Dakota to compete with Blue Cross Blue Shield and reduce the 90 percent market share it has.


That will start to open up this market, not only for the consumers but also health care providers by giving people more choices and more options.

No. 2: Aggressively enforcing the law with respect to any agents or companies that are breaking the law. The most notable example would be Larry Atkins. Atkins is current facing 78 felony charges in Fargo. When my office discovered the conduct he was engaging in, we started working and investigating in a collaborative effort with North Dakota Securities Department. Ultimately, we turned over to the Cass County state's attorney's office information with respect to criminal activity.

Then, on our end -- the administrative end -- I had my department move forward immediately to suspend and then revoke his insurance license.

This case involves a number of victims and millions of dollars of fraud and illegal activity. My office is doing everything we can, not only to help with the prosecution or investigation of these matters but also to try to track down any assets that might be available for victims and their families to try to replace what they've lost.

I'll continue to do that over the next four years. Obviously, I have a background as a prosecutor, so enforcing the law is something that comes naturally to me. I guarantee that over the next four years, I will have absolutely no problem in vigorously enforcing the law against any agent or company that's breaking the law.

The third item is Northwood, N.D. The tornado happened Aug. 26, and I started as insurance commissioner Oct. 22.

Q. Tell us about your involvement as commissioner.

A. When I got here, a lot of what I'll call the private property issues had been resolved or were in the process of being resolved. Over the course of the past year, there were about 70 informal inquiries to the insurance department for help and 10 formal complaints. A formal complaint is where a consumer actually fills out and signs a complaint against his or her insurance company.


Then, an investigator from my department is assigned and works as a liaison between the consumer and the insurance company to try to come to a resolution.

As result of those inquiries and complaints, my department has been able to recover an additional $250,000 that was directly paid to consumers with the help of the insurance department. But again, a lot of those issues were resolved or on their way to being resolved when I started.

What wasn't resolved was the dispute between the school and the insurance department's Fire and Tornado Fund regarding the insurance claim on the school building itself.

For a little background: The school and contents were insured by a policy with the Fire and Tornado Fund. The school had a policy with limits of $8.3 million on the building, if memory serves, about $1.4 million on the contents.

The school got its own engineering expert to go through the building and to determine the cost to repair or replace it, whichever was less -- because the policy on the school is not much different than a homeowner's policy. Their expert determined the school was a total loss and had basically stopped his analysis at $8.9 million, remembering that the policy limits were $8.3 million.

So, their expert was of the opinion that because we're already at $8.9 million in damages to repair or replace, the fund should just pay at $8.3 million.

But that expert was the same company that the school retained to actually do the rebuilding work. So, the Fire and Tornado Fund got its own expert to act as a check and balance on the system. The company that the fund used was EAPC, which was the engineering firm used for most of the work after the Grand Forks Flood of 1997.

They are, without question, the most widely respected experts on this subject in North Dakota.


They came in and literally went room to room in the school. Then, they came back with their expert opinion that the cost to repair or replace, whichever was less, was $6.9 million.

So, about the time I show up on Oct. 22, there's a $2 million difference of opinion between the experts.

For the first few weeks that I was insurance commissioner, the Fire and Tornado Fund and the school were comparing and contrasting these two expert opinion reports and trying to resolve it. After about a month, it was pretty clear to me that the process wasn't working and was heading toward a lawsuit.

So, I interjected myself into the process. Jeff Bitz, who runs the Fire and Tornado Fund; Kevin Coles, the superintendent at Northwood; and I worked for the next six to eight weeks, trying to work through these differences.

It wasn't just that it was a $2 million difference; there were substantial differences in how each of them got to that number. There were substantial differences on pretty much everything.

Working back and forth over that period of time, we finally got to a point where we resolved it for a total payout of about $8 million, and that includes the payment on the contents. Remember, that was a separate policy.

To me, this was a success story, because we worked through the issues, kept the lines of communication open and got a positive resolution. If we hadn't done that, it would have ended up on a protracted lawsuit for 18 to 20 months.

The agreement let Northwood move forward in building their school.


Q.What challenges do you think need to be worked on?

A.The No. 1 issue that needs to be worked on in North Dakota is health insurance. It's top three nationally and top three in North Dakota. As I travel the state, it's the first thing people want to talk to me about.

We need to move on three big issues in the next four years.

First: competition and choice, which we already touched on. Blue Cross Blue Shield's total earned premium for the year ending 2007 was $415.8 million. The next closest company is Metaca; their earned premium in 2007 was $17.3 million.

That's a significant difference.

Q. As long as I've lived in North Dakota, the "Blues" has been the major health insurance provider. What has changed?

A. I knew they were a big company before I became commissioner, because I was a health-care consumer like everyone else. I didn't realize how big until I got here and looked at the numbers.

They've always been a dominant player in North Dakota, but it has only been in the past few years that they've grown to be on the verge of a monopoly. That's not working out for the consumers or providers in North Dakota. It has to change with more competition to drive the prices and the deals struck with health care providers.


Health insurance companies say competition works. I want it to get closer and closer to the market regulating itself.

Q. How is the AIG bailout going to affect North Dakota?

A. The companies doing business in North Dakota that are under the umbrella of AIG are solvent. They're paying claims, and they're doing just fine. There are several dozen of them, and last year, they collected premiums of about $70 million.

The problem with AIG was the holding company. It was the holding company that made bad investments and engaged in risky behavior.

AIG works like a lot of these conglomerates that are made up of smaller parts. The smaller parts that people care about in North Dakota are insurance companies that people do business with through annuities. Those companies are fine.

And, it's those companies that predictably will be sold off to other big conglomerates in order to pay off the debt AIG now owes to the federal government.

If there ever was a perfect example of how regulating insurance should be done by states and not by the federal government, AIG is it. Those several-dozen companies I'm talking about are not domiciled in North Dakota. They're all domiciled in other states or countries. And, they're obviously regulated by the states that they do business in.

Because of that state regulation, they are solvent, they're paying claims, and they're doing normal business.


These companies are the jewels in AIG.

Q. Tell us a little about North Dakota's Workforce Safety and Insurance agency.

A. I support the measure to WSI back underneath the governor's control.

Q. Why?

A. When you have an agency such as WSI that affects as many North Dakotans as it does, the chief executive of the state --the governor--should have a role.

WSI started in 1919, and the governor did have control over it all the way up until 1997, when that control was taken away by the Legislature.

Over the past 11 years, it has become clear that we should go back to giving the governor control. But that's not where it stops. If you look at the proposal that I put out in February, it states that the insurance commissioner can help bring accountability to WSI.

My proposal builds on the expertise that the department has in regulating insurance companies. We make sure claimants are being treated fairly and that the companies have assets to pay claims.

My proposal has been received very well. It dovetails with the governor taking control of the agency. If Measure 4 passes Nov. 4, the WSI director will become a cabinet-level position, the way it used to be. If my bill passes in the next legislative session, we could then review how claimants are being treated and whether WSI is paying its claims and has adequate reserves.

Then, I'd simply forward reports to the governor, and the governor could, if he chose, take action through his executive director. That way, there would be two independent and elected offices having input on the accountability of WSI.

Q. Is there anything we've missed?

A. I thoroughly enjoyed doing this job since I started last year. I love public service, being able to help people and trying to make a difference every day. I'd like to do this job for another four years.

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