James T. Wrynn, an attorney and former executive director of the New York State Insurance Fund, became New York state's 40th insurance superintendent in August. He succeeded Eric Dinallo, who left to join New York University. In an interview with Business Insurance Associate Editor Zack Phillips, Mr. Wrynn talked about plans to revive the New York Insurance Exchange, broker pay regulations and a medical malpractice initiative.

Q: What attracted you to the New York Insurance Exchange and why do you think it can be successful this time, whereas in 1987 it wasn't?

Two things really attract me to it: No. 1, I think there is a need for a facility that the New York Insurance Exchange would provide...No. 2, especially in view of the financial crisis, I think New York has to think innovatively going forward.

I believe it should be successful for a number of reasons. One, it's a different time. Back when the original exchange existed between 1980 and 1987, the alternative risk market had not developed to the point where it is today. Telecom had not developed to the point where it is today. Capital markets were a little different. Today, I think there is a more of a desire, especially by nontraditional sources of capital, such as hedge funds and private equity firms, to invest in a facility such as the exchange.

Other reasons why it wasn't successful back 25, 30 years ago was that I don't believe it was properly capitalized. It ended up taking on a lot of adverse risk. Also it was a victim of the soft market. It pretty much was affected (by the soft market) the same way as Lloyd's (of London); it's just that Lloyd's ability to withstand the economic downturn was better because of the capitalization because of its access to capital, its history and, of course, the desire of the members to make it work.

Q: In your conversations with industry leaders so far, do you get a sense that this is something that they'd be interested in, especially when there are a lot of financial pressures on companies? I wonder what companies' feelings would be about putting their capital toward kind of a new, upstart project.

With respect to nontraditional sources (of capital), this provides another vehicle. Right now, these groups don't really get involved in the insurance world because of the time commitment involved. (Through the exchange), they'd be able to get in and out much quicker than they would if they invested in a traditional insurance (source).

Q: Department officials have talked about getting some kind of tax advantage or competitive tax treatment for the exchange. Is that a prerequisite or could the exchange work without it?

I don't believe it's a prerequisite at all, but it is something we're very seriously considering and pursuing.

Q: So is this something that you're looking to have in operation in 2010?

We're working on it continuously and we'll just see how it develops. Again, we're conducting our due diligence to make sure it's fully evaluated and that, when we do move forward, we do so at the right time and in the right manner. We don't want to rush it through to say we did it for the sake of doing it. We want to make this work going forward.

Q: What is the status of the department's producer compensation regulation?

The producer comp regulation is up with the Governor's Office of Regulatory Reform for consideration. I'd assume they'd be making a decision relatively soon.

Notwithstanding the fact that it's there, we've still been meeting with people and listening to concerns even though we have heard most of the concerns because we've met with almost all of the stakeholders at this point. I haven't personally...but certainly people in the department who've been working on this for the last year have met with them.

One of the things I want to do as superintendent is have an open dialogue. And to the extent (this regulation) hasn't been signed off on, we're going to continue to (meet with stakeholders).

Q: When you expect to make a decision on the settlement agreements with Marsh, Aon and Willis?

That's something we're also very seriously looking into. We do want a level playing field for all of the players in the New York market and we are strong advocates of disclosure for the consumer. So with those considerations in mind, we are taking a look at this to see what, if anything, should be done.

Q: What are you doing about medical malpractice reform?

Right now, I have a medical malpractice proposal that I'm meeting with each of the stakeholders on to just get some preliminary input from them on whether or not they would support such an initiative. The preliminary response has been very positive, but I'm reluctant to give the specifics until everyone's been contacted. I don't want anyone to feel blindsided. Generally, medical malpractice reform is a top priority of the governor's.

Q: What else are you and the department are working on?

To help consumers, make sure coverage is available and affordable; for agents and brokers, to be as much if not more a facilitator than regulator; and even (for) insurance companies, which are a very big part of New York's economy, to do what we can in these trying times to make it easy to do business in New York—streamline the rate and form-filing process, that's a major initiative we're undertaking. That's something within our ability that shouldn't require an additional expenditure of money, which would be difficult to justify in these times.