Malloy taps venture capitalist for Insurance
Gov. Dannel P. Malloy has tapped a venture capitalist who advises the insurance industry to lead the Connecticut Insurance Department, an agency that has come under criticism for being too cozy with the businesses it regulates.
Malloy said his pick, Thomas B. Leonardi, is not an industry insider, but someone with a “unique perspective” and expertise from working with the industry at multiple levels. Leonardi, 56, is chairman and CEO of Northington Partners Inc., an Avon-based venture capital and investment banking firm that advises and invests in the insurance industry.
In introducing Leonardi, Malloy spoke of the insurance department’s role in protecting consumers and the need to recognize the industry as a source for economic growth.
“I think we found somebody who actually strikes just the right balance, the appropriate balance of great knowledge of the industry having worked with the industry, having observed the industry, but is also going to be a great friend of the consumer,” Malloy said.
Leonardi echoed Malloy’s dual focus. He noted that consumer protection is the primary mission of the department, and spoke of the need to provide timely responses to consumer complaints, ensure that products are clearly marketed and suitable, and make sure that insurers can pay claims. He also pointed out that the number of insurance industry jobs in the state–more than 65,000–is nearly 25 percent less than it was two decades ago.
“It’s important to note that the goal of strengthening the industry does not in any way conflict with the department’s primary mission of ensuring fair treatment and quality service to the consumer,” Leonardi said.
The once-obscure commissioner position has gained visibility recently amid a series of unpopular health insurance rate increases, and is likely to remain visible as the state implements federal health reform.
The previous commissioner, Thomas R. Sullivan, drew public scrutiny after approving a double-digit health insurance rate increase that had been attributed to new requirements of the health reform law. Sullivan spent more than 20 years in the insurance industry, including serving as an executive at The Hartford, before he became commissioner.
Critics have called for the commissioner to be more aggressive with the insurance industry, and some have said it should be an elected job. But others have warned that the job should not be politicized, noting that the commissioner must both protect commissioners and ensure that insurance companies remain solvent.
As the choice of the first Democratic governor in 20 years, Leonardi drew praise–and evoked a sense of relief–from the insurance industry.
Keith Stover, a lobbyist who represents the Connecticut Association of Health Plans, called Leonardi’s appointment “very, very encouraging” for the industry.
“Clearly, given his background and experience, he knows about growing insurance companies,” Stover said. “And clearly the governor, by making an appointment like this, is sending a message that he wants the insurance industry writ large to grow and develop.”
Stover said Leonardi could be in a strong position to protect consumers by being “someone who is not necessarily of the industry, but knows the industry.”
Robert Kehmna, the president of the Insurance Association of Connecticut, said, “We certainly appreciate what Gov. Malloy and Mr. Leonardi had to say about the importance of the insurance industry and its place in this state.”
Juan Figueroa, president of the Universal Health Care Foundation of Connecticut, meanwhile, was heartened by comments Leonardi and Malloy made about the importance of consumer protection. Leonardi appears to be an outsider who is “probably not beholden to anybody here in the state of Connecticut,” Figueroa said.
“I think it will be good to have an insurance commissioner who understands the business underbelly of the industry,” Figueroa said. “When the industry cries foul over health care reform because they’re going to lose x amount of jobs, I would think this guy really knows whether in fact that’s true or not.”
The next few years will require innovation in the health insurance industry, and Leonardi’s understanding of the business could help, Figueroa said.
As commissioner, he will face two early tests of his ability to balance the needs of consumers and the industry, Figueroa said–in the positions he takes in setting up the health insurance exchange that will be a marketplace for coverage once health reform rolls out, and in improving the department’s process for reviewing health insurance rate increases. The insurance department received a $1 million federal grant to improve the process last year.
Not everyone was as optimistic about the appointment.
Leonardi’s work with the insurance industry concerned Karen Schuessler, director of Citizens for Economic Opportunity, which called for Sullivan to resign after he approved a double-digit health insurance rate hike. But she said it’s too early to tell how he will look out for consumers.
Schuessler said she hopes he will hold more public hearings on health insurance rate proposals and make the rate review process more transparent.
Leonardi, who lived in Connecticut for 32 years until moving to Long Lake, N.Y., in 2005, plans to return to Connecticut and resign from his company. He previously served as senior vice president at Conning & Company, where he was responsible for mergers and acquisitions and venture capital activities. He also served as president and vice chairman of insurance subsidies for the Beneficial Corporation.
Malloy cited Leonardi’s efforts in “giving back to his community,” and Figueroa said they showed that he had been connected to the community, not just isolated in the finance world. According to his Linkedin profile, Leonardi serves as chairman of the board of trustees at the Adirondack Medical Center Foundation, a three-term member of the Region 10 Board of Education, which covers Harwinton and Burlington, and a member of the board of trustees at Westminster School in Simsbury.
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