While the insurance industry in Virginia has changed since 1996, one thing has remained constant: Al Gross has been the state’s insurance commissioner.

Gross, 63, was named acting commissioner in May 1996 and appointed to the post three months later. In his 13th year as commissioner and his 28th with the state bureau, Gross told IFAwebnews.com that he still enjoys coming to work in the Tyler Building in Richmond, Va., each day and that he is “never bored.”

Alfred W. Gross

“My decisions are important for people’s lives,” he said. “I know that and try to remain aware of that and the challenges are always interesting.”

His tenure in Virginia is the longest of any appointed commissioner and the second longest time in office overall, according to the National Association of Insurance Commissioners, just behind the 14-year career of Georgia Insurance Commissioner John Oxendine.

Gross recently sat down for an interview to discuss his tenure in Virginia, current issues in the state and across the nation. Below are excerpts of that interview edited for clarity.

IFA: In February, your office took receivership of Roanoke-based Shenanoah Life. What is the status of the company’s rehabilitation?
Al Gross:  Unfortunately, I can’t give you a lot of details, especially about negotiations and discussions with all the companies of Shenandoah Life. But what I can tell you is that we do have a bidding process for companies who are interested, hopefully are interested, in the company. The company has value, not only for the business that is on the books, but it does have an efficient plant in the western part of our state so we are still hopeful in rehabilitation, and we’ll see how events unfold.
We want to close it as soon as possible. Hopefully, we’ll know something by the end of the year. …Purchasers have to go through due diligence; they have to know what they are buying before they can make an offer. This is definitely not an impulse buy. They have to know what they are purchasing.

What do you hear from agents and brokers regarding issues in Virginia’s markets?
I don’t hear much in the way of complaints about our particular laws or our administrative laws. I’d like to think that both we and the continuing education board try to be oriented toward our constituents and make the process as clear or transparent as possible and as painless as possible.  So I don’t hear complaints as much about how we are structured here. I do hear about national licensure, and the feeling that it is going to be an issue.
There are complaints about the economy, of course. People are making less money, but that’s not just an agent problem.

Are you seeing the impact of the economy on your agency?
We’ve had no pay raises and the commission itself is exercising very close control on increased staff.  Fortunately for my agency, I think we are adequately staffed.
Our efforts in automation over the past few years are finally paying off in terms of reducing the need for staff. And so, we are able to work more efficiently with the staff we have. I’m not sure I could hire if I wanted to, but on the other hand, I don’t really need to.

What if the state requires additional cutbacks?
We’d adjust. I have a very good staff. I have depth of bench in terms of experience with a lot of folks here, as we haven’t had a lot of turnover. I’m very proud of my staff; in fact, one of the things I am proud of during my tenure is, and I don’t mean it is just because of me, but I’ve been able to cultivate a good staff, a loyal staff and one I consider one of the best in the nation.

To what do you attribute to your longevity as insurance commissioner?
I still love my job. At times, life gets quite hassled and sometimes, like in any job, there periods of low and periods of high activity. But insurance is very interesting and insurance regulating is very interesting. Insurance touches so many aspects of life. A lot of creative folks have tried to figure out ways where life can be made a little more secure, so regulating this activity, things just come up again and again.
I’m involved with the NAIC, as chair of the financial condition committee and also the solvency modernization initiative. These are always full of new challenges because we have a new marketplace that keeps developing. I guess it is the challenges that have kept me here and the commission has been very supportive.
Our system here in Virginia is one where we are responsive to the General Assembly, yet we are allowed a level of independence as regulators that we need. It works very well here and has made it possible to keep the staff and develop the staff professionally. Though we are just a mid-sized state, I think we provide very valuable input on the national level through the NAIC and in working with our fellow regulators. Those are the things that keep me here and Richmond is a very nice place. Plus, I like public service too.

Do you think about how long you will remain as commissioner?
Everybody thinks about the future, but I still like what I do and enjoy the challenges. As long as I can be productive, I’ll be here. When I feel it is time to leave, I will.
I work at the pleasure of three judges [at the State Corporation Commission]. If for some reason, I don’t fit in with the goals of the commission or the judges ask me to leave because they no longer think it is a good fit, that is a different situation. But I don’t have that gubernatorial election I need to worry about, not directly anyway.

Are there still key goals you’d like to accomplish as commissioner?
There have been a lot of advancements in technology and lots of web-based systems, and there are ways we are working on now, to improve constituent service through use of our website.
Another area state regulators need to be aware of is lessons learned from this financial crisis and there are areas where we need to modernize our financial regulation. My personal expertise is in the financial area.
The NAIC started modernization initiatives years ago, but the pressures are growing to modernize, to work more quickly, to deal with global developments, developments in regulatory methodologies, risk management techniques and improvements, so that we have not only an effective system of regulation, but an efficient one that is not too burdensome for the industry.
So on the financial side, that means making sure that our surveillance is risk based. How to do that both for in-house financial analysis as well as examinations, group wide supervision – that’s more of a challenge.

How would you characterize your personal approach to regulation?
A competitive marketplace is the best marketplace, where consumers have a choice. Now, I always keep in mind that my responsibility is to protect policyholders under our statutes.
My authority is to administer the laws, the statutes, the regulations promulgated in Virginia, and that’s part of our mission, but it is also to provide a balanced regulation of the industry, so balancing competition with consumer protection.
We don’t really want to be interventionist and our statutes reflect that. With that being said, there is the interest of policyholder protection. For example, we have a company that is showing signs of stress and there is no way for them to get out of it, we may have to intervene. Hopefully, that doesn’t happen too often and it doesn’t.
And you have to watch out for [illegal] practices in the marketplace  – whether perpetrated by a company, an agent, whomever.

How do you avoid a passive approach to regulation?
You have to be vigilant. Companies may be trending downward in their operational and financial health. You have to be aware of that and monitor the marketplace very carefully. Arguably, you almost have to be more active in monitoring the marketplace.
The worst is abdicating. You can’t abdicate your regulatory responsibilities. Having a competitive market doesn’t mean abdicating your regulatory responsibilities. You have to ensure that your carriers are financially sound and are behaving themselves in compliance with the statutes and you are giving consumers a fair deal.
You can’t say we’ll just follow what the companies do or the agents do. That’s not the case as I’m going to be the one held responsible.

What are the keys to preserving state-based regulation?
First, I think we [insurance commissioners] have a good story to tell, so there is a communication issue. It’s making sure that we communicate what needs to be done in insurance regulation and how complex it is. That it’s quite different than banking. It is more complex on the product side. And I think we have a good story to tell on how we serve consumers and our modernization efforts.
There is a dearth of insurance expertise on the federal level. So where will it come from?
Hopefully, it will come from us as one thing we can do. And we need to also be vigilant that we are serving the marketplace in terms of policyholders and the insurers.
Policyholders first and foremost, because they need the protection, but also the industry. And those are not always as compatible as some people may want to think.  You want sound products, but products that are good for the consumer too.
The [financial and insurance] markets are linked, so that is a challenge. However, the state regulator has to wear two hats. He has to be aware that he is part of a national system of regulation that has to work.
On the other hand, he has local constituents with local concerns and local interests and you have to have a responsibility to take into account and to address.
That is sometimes a balance that is hard, but the advantage of state-based regulation is that it is state-based and that you have an idea what the market is here and our consumers still have good access.

This story originally appeared in the September 2009 print edition of Insurance & Financial Advisor.