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Insurance Commissioner Faces Tough Confirmation

Senate Democrats have torpedoed at least one of Gov. Rick Perry’s appointments during each of the past two legislative sessions. Texas Insurance Commissioner Eleanor Kitzman could be the next to fall.

Appointed by Perry in 2011 to lead the state’s insurance regulatory agency, Kitzman “has serious problems” in the Capitol, said state Sen. Kirk Watson, D-Austin. The commissioner has been criticized for being too soft on the insurance industry, neglecting consumers and hiring expensive consultants.

Kitzman, appointed between legislative sessions, now faces her first confirmation process, starting with the Senate’s Nominations Committee in early March, then a vote by the full Senate.

Several Democrats — and at least a couple of Republicans — have said the commissioner faces long odds against keeping her $175,240-a-year job.

In a phone interview, Kitzman said she’s planning to talk to each senator and give them a chance to get to know her.

“I’m aware there are some members that have a view about certain things.” Kitzman said, declining to get specific. “And some of those views may be pretty entrenched. Others are, I think, based on — let’s say — less than the whole story on some things. And I just want to give them an opportunity to, like I say, have complete information and make an informed decision.”

Kitzman ran South Carolina’s insurance department from 2005 to 2007, resigning after a disagreement with then-Gov. Mark Sanford over coastal wind coverage. She ran unsuccessfully for South Carolina’s lieutenant governorship in 2010, collecting thousands of dollars from insurance-related organizations.

South Carolina Gov. Nikki Haley, later appointed Kitzman, a friend who grew up in Houston, as executive director of the South Carolina Budget and Control Board. Kitzman left that job when Perry tapped her to head up the Texas Department of Insurance.

Kitzman’s appointment came during Perry’s presidential foray, when he wanted to solidify connections to other prominent Republican governors, particularly in South Carolina, an early primary state, said Cal Jillson, a Southern Methodist University political science professor. But when Perry’s candidacy fell apart, Haley endorsed Mitt Romney.

Perry’s office released a statement last week saying: “Commissioner Kitzman has a great deal of experience and qualifications to lead the Department of Insurance. In accordance with state law, we look forward to receiving the advice and consent of the Texas Senate.”

Jillson sees that statement as a little weak: “(It) says essentially to the Senate, ‘Do what you think is best.’”

To keep her post, Kitzman will need approval from two-thirds of the Senate. With such a high hurdle, Watson and his fellow Democrats have the votes to kill Kitzman’s confirmation on the floor if they stick together.

In an interview, Watson questioned Kitzman’s motivations, noting her strong ties to the insurance industry. “She’s biased in favor of the industry that she is supposed to be regulating,” he said.

Watson added that he has heard repeatedly that Kitzman hasn’t been as protective of consumers as she should. As the senator representing Kitzman’s home in Travis County, Watson has the privilege of busting Kitzman’s confirmation, though he said he hasn’t yet decided if he will.

Other Senate Democrats also have voiced concerns.

Earlier this month, state Sen. John Whitmire, D-Houston, leaned into Kitzman during a Senate Finance Committee hearing, questioning her decision to hire Alvarez & Marsal, a New York-based consultant, to look into the troubled Texas Windstorm Insurance Association, known commonly as TWIA.

Alvarez & Marsal was originally awarded a $385,000 contract to provide “organizational analysis” of TWIA. Kitzman testified that two more contracts followed: one for the review of closed claims and another for ongoing handling of TWIA claims. Fees paid to Alvarez & Marsal have reached more than $1.5 million.

“I just think you’ve kind of, really lost control,” Whitmire told Kitzman. “Or maybe you’re very much in control of the use of consultants.”

Kitzman defended her decision, telling Whitmire that her staff knows about regulation, but not about operating an organization like TWIA.

Whitmire punctuated his questioning by telling the commissioner that she likely would have to explain herself again in front of the Nominations Committee.

Earlier this year, state Sen. Wendy Davis, D-Fort Worth, sent Perry a letter slamming Kitzman for removing a rule put in place by the previous insurance commissioner. The rule was intended to protect consumers by requiring insurers to tell patients when they would be on the hook for additional out-of-pocket expenses related to out-of-network fees. The rule change also would prolong the amount of time it takes doctors to be compensated for their services, Davis said in the letter to Perry.

Though Democrats have widely criticized Kitzman, some Republicans also have said they believe Kitzman sold out to insurance companies.

“She has ignored a lot of rules,” to the benefit of insurers, said Sen. Bob Deuell, R-Greenville, a physician. “I don’t think the votes are there to confirm her.”

The commissioner defended herself against allegations of being too pro-industry. “If you look at everything that has been done, you can’t say that there’s any evidence that I made a decision because I have some relationship with or bias toward the industry,” she said. “That’s not how I do things.”

State Sen. Dan Patrick, R-Houston, one of the chamber’s more conservative members, also said he has “serious concerns” about Kitzman, though he declined to get specific.

Consumers, too, have had issues with the commissioner.

Alex Winslow, executive director of the advocacy group Texas Watch, has criticized Kitzman for allowing a 20 percent rate increase of State Farm Lloyds’ homeowners’ policies.

But Kitzman isn’t without allies. Mark Hanna, a spokesman for the Insurance Council of Texas, said most people in the insurance industry generally think Kitzman is doing a good job, deserving credit for facing TWIA customers, for putting prosecutors in Harris and Bexar counties to investigate insurance fraud and for organizing a conference on hail last year.

Written by Tim Eaton, Austin American-Statesman