Leadership Corner: Jeffrey P. Schmidt
Interviewed by Deborah Adamson
Advertiser Staff Writer
Name: Jeffrey P. Schmidt
Age: 50
Title: Insurance commissioner
Organization: Insurance Division, Hawai'i Department of Commerce and Consumer Affairs
High School: Herbert Hoover High, Glendale, Calif.
College: UCLA, graduated with a bachelor of arts degree in philosophy. Also received law degree from the Martin Luther King Jr. Hall School of Law, University of California, Davis.
Breakthrough job: Corporation counsel for Maui County — the chief legal adviser for the mayor, City Council and department heads.
Little-known fact: Volunteered to lead hikes for teenage felons from the California Youth Authority through the mountains around Los Angeles.
Major challenge: Finding the correct balance between providing good protections for consumers and a good business environment for those in the industry.
Books recently read: "The Wealth of Asia," a book on art and spirituality by Kaminaga Zenji; "Jacques Derrida" by Geoffrey Bennington, a book on the philosopher credited with developing deconstructionism; and, on the lighter side, "Island of the Sequined Love Nun" by Christopher Moore, a humorous tale about a pilot who gets fired and the only job he can get is flying a private jet for a couple who runs a scam on an island in the Pacific.
Hobbies: Reading, hiking, bodysurfing and kayaking, playing the harmonica.
Q. What is the biggest challenge confronting insurance today?
A. There are a number of very serious problems in insurance today. In health insurance, we're continuing to see a rise in medical costs, which results in a rise in premiums. In workers' comp, we have one of the worst workers' comp systems in the entire U.S. It takes too long to get through the process and that makes it far too expensive and it hurts the workers who want to get the rehabilitative services that they need so that they can get better and get back to work. Liability insurance has been particularly difficult to get and the premiums have been rising rapidly for construction companies.
Q. What do you think can be done so the Insurance Division can better do its job?
A. I think it's important that we have uniform laws and reciprocity with other states. Because we are a small and isolated market, a continuing challenge is to attract insurance companies that want to do business here, so we have good competition. If many of our laws are similar to larger markets like Arizona or Washington, then companies doing business there will say, why not do business in Hawai'i as well.
For example, we passed the Producer Licensing Act, which makes our laws for licensing agents and brokers uniform with other states. That resulted in an increase in the number of our licensees from about 1,800 when I took over (2ý years ago) to over 20,000 today. That means if an agent is licensed in other states they can get a license in Hawai'i as well (without further testing).
Last year, we proposed and the Legislature passed, the Interstate Life Insurance Compact. That provides for uniform laws for life insurance products amongst the states.
Q. What aspect of insurance do you think is the most misunderstood by consumers today?
A. Most consumers think their policies cover everything. That's the standard statement. But it's important to read the policy carefully or have a good, trustworthy agent to advise you, because policies have always had limitations on coverage and a variety of other requirements. It's a very important document and usually people know they need it but they don't want to think about it. They just throw it in the drawer.
Q. Do you see yourself as an Eliott Spitzer (the New York attorney general who has cracked down on the financial services industry)?
A. Mr. Spitzer has done some very good and necessary investigations of practices in insurance and other business. But he has a tendency to go overboard in some of his comments, probably because he's decided to run for governor.
I am conducting an inquiry of insurance industry practices here along the lines of Mr. Spitzer's investigation to ensure that agents, brokers and insurance companies are treating Hawai'i's consumers fairly. I am doing an inquiry of real-estate title insurers based on some improper practices that have been complained about, and we have achieved significant successes in uncovering illegal and improper behavior (made) by a few individuals in the industry.
Q. How did you get into insurance?
A. As an attorney, both on the defense and plaintiff side, I had had experience in several different lines of insurance. As Maui corporation counsel, the governor saw that I understood how to get things done in a government context and solve problems. I submitted my application to her and said that I would like to be a part of the administration. She knew my strengths well enough so she could decide the best place for me.
Q. What's next for you? Do you have any political ambitions?
A. Certainly not elective office. I have too many skeletons in my closet. I don't have any plans. I do the best job I can at the job that's before me. When it's time to move on, I'll determine the best route to go at that time. Almost as soon as I took this job people asked me where I wanted to go.
Q. Why would they ask you that?
A. Prior commissioners have averaged two years (on the job). They have a tendency to come and move on to other positions in the public or private sector.
