Roxani Gillespie: Consumer Ally or Friend of Insurance Industry?

State Insurance Commissioner Roxani Gillespie would like to be remembered as a friend of consumers.

Sitting in her high-rise office, the former insurance company executive proudly displays a stack of 100 thank-you letters the Insurance Department has received from individuals grateful for the help they got with their insurance problems.

“I have really turned the department on its ear,” she said. “I have really strengthened the consumer areas, and I have opened up the department to the public process.”

Gillespie’s view of herself, however, is not one that is widely shared in the community of consumer activists. Ralph Nader, among others, sees her as a creature of the business she is supposed to regulate.

“Roxani is someone who should immediately return to the industry that spawned her,” Nader said.

Now, with the passage of Proposition 103, the outspoken Gillespie has the opportunity to show what kind of consumer representative she really is.

If the state Supreme Court rejects a legal challenge by the insurance industry and upholds the initiative, Gillespie will have vast new powers to regulate insurance companies. She will have the final say over the rates that insurance customers pay and the profits that insurance companies make.

At the same time, the consumer advocates who drafted Proposition 103 made sure that political appointees like Gillespie will not run the Insurance Department much longer. Reflecting the drafters’ frustration with the inability of Gillespie and her predecessors to curb the cost of insurance, Proposition 103 will transform the office into an elected post in 1990.

“She’s a good reason why the elected insurance commissioner provision was written into (Proposition) 103,” said Nader, a leading sponsor of the initiative. “She should start sending out her resume.”

If Gillespie wants to keep her job beyond the next two years, she will have to run for election and win approval of the state’s voters. However, she announced right after the passage of the “voter revolt” initiative that she has no intention of campaigning for the post.

“I’m not a politician,” she explained. “I’m not here because of my political skill.”

The 47-year-old Greek immigrant, who came to the United States 25 years ago, was appointed by Gov. George Deukmejian as chief deputy insurance commissioner in 1983 and as commissioner in 1986.

“When you think about it, it’s unusual to find a middle-aged matron from Greece doing what I’m doing,” she said in her soft, lilting accent.

Fluent in five languages and an avid student of ancient history, Gillespie began her career in the insurance business as a claims adjuster. An attorney and mother of two, she worked her way up to become a vice president of San Francisco-based Industrial Indemnity but believes her career was stunted in the male-dominated industry because she is a woman.

Accustomed to adversity as a child in war-torn Greece and as a woman in the working world, Gillespie said she welcomes a challenge. Confident, engaging and articulate, the commissioner also seems to enjoy being in the public spotlight generated by Proposition 103.

She approaches her work with a healthy sense of humor, but she can also be harsh toward her opponents and blunt in her remarks.

“I am tough if I think I’m right,” she said.

For example, she is not shy about taking on Nader, despite the enormous popularity he enjoys among California voters.

“The first time he was quoted as saying things against me, it was almost like having Mother Teresa say things against me,” Gillespie said. “I don’t think he knows a thing about insurance, but here’s his opportunity to learn.”

Gillespie perceives her job as having two major--and sometimes conflicting--purposes: protecting the solvency of the insurance companies and insuring fairness for policyholders.

In the past, insurance commissioners have stressed the importance only of making sure that insurance companies remain profitable so they are able to pay off claims. But this seems to have changed in an era of skyrocketing insurance costs.

“It’s a question of balance,” Gillespie said.

Whether Gillespie has maintained that balance is the subject of considerable disagreement.

Although she sometimes has been at odds with individual insurance companies, she generally has won praise from the industry for her performance.

“She is a very capable, highly principled person who is working extremely hard. She inherited a very difficult job at a difficult time,” said Bob Puccinelli, chairman of Industrial Indemnity and Gillespie’s former boss. “I can’t think of anyone in the state of California who would be more qualified.”

But among consumer advocates, Gillespie’s name evokes ambivalence at best and, in many cases, harsh criticism.

“She has never done anything I would view as pro-consumer without being dragged kicking and screaming,” said Bob Hunter, president of the National Insurance Consumer Organization. “She’s always defended the insurance industry.”

Hunter, who served as federal insurance administrator under both Presidents Gerald Ford and Jimmy Carter, ranks Gillespie as one of the worst state insurance commissioners in the nation.

“You basically have a timid mouse in a job that requires an aggressive guardian,” agreed Robert Fellmeth, director of the San Diego-based Center for Public Interest Law. “We’re talking about someone who is making little public relations gestures in areas of little consequence, while the industry she is supposed to be regulating is engaged in massive abuse on her watch.”

Fellmeth called for Gillespie’s resignation long before the voters approved Proposition 103.

“(Proposition) 103 is the public’s condemnation of her and her predecessors, telling them they blew it,” he said.

Several Democratic legislators were more kind in their evaluation but uncertain whether Gillespie really has the consumers’ interests at heart.

“I’ve known her for some time, and I’ve always admired and respected her. We’re good friends,” said Sen. Nicholas C. Petris (D-Oakland), who is active with Gillespie in the Greek-American community. “Having said that, she does come from the industry, and she has an industry orientation, as all commissioners before her have had.”

Said Assembly Finance and Insurance Committee Chairman Patrick Johnston (D-Stockton): “She’s pretty hard to read. I can’t decide in my own mind whether Roxani is moving to appreciably improve the department or simply to put a better face on what it is they do.”

All sides are closely watching to see how Gillespie uses the substantial new regulatory power she gains under Proposition 103.

Last week, the state Supreme Court lifted a stay that had temporarily blocked most major provisions of the initiative from taking effect. The court will hear arguments next year on the insurance industry’s legal challenge to the initiative.

In the meantime, Gillespie will have the responsibility to begin implementing Proposition 103. She has said she plans to add 300 employees to the Insurance Department and $18 million to its budget to carry out its new duties, more than doubling the current size of the staff. Under Proposition 103, the additional money would come from the insurers.

As commissioner, she will have the power to decide whether to approve rate increases proposed by individual insurance companies. She will also determine what factors go into setting rates. In addition, she gains the authority for the first time to examine the financial records of all insurance companies doing business in the state.

But the major test Gillespie may face under Proposition 103 relates to one section of the initiative that still remains blocked by the Supreme Court: the popular 20% rate reduction.

If the court rules it constitutional, insurance companies will be required to roll back their rates to levels 20% below those of November, 1987, and freeze them until November, 1989.

During that year, the initiative gives the insurance commissioner the power to grant rate increases--but only for companies she finds threatened by insolvency.

Some consumer activists fear that Gillespie may use the power to thwart the intent of the initiative by approving substantial rate increases. They cite remarks she made during the initiative campaign that they believe signaled her personal opposition to the measure.

At a legislative hearing in September, Gillespie said Proposition 103 “would pose very major solvency concerns” for the insurance industry. She said it could put as many as 75 insurance companies out of business in California during the first two years and force the state to enter the insurance business.

But Gillespie pledges that she will enforce whatever sections of the law are ruled constitutional, despite her belief that the measure is flawed because it does not reduce the cost of insurance claims.

“It is my job to implement the law as the law is,” she said. “(Proposition) 103 can be nothing more than a first step. There’s a great deal more that needs to be done.”

In the weeks after the election, Gillespie has taken on a number of insurance companies that threatened to circumvent the measure.

When State Farm Insurance, the largest seller of auto insurance in the state, announced it would sell new policies at 20% higher rates, Gillespie called the action “pretty reprehensible.” Soon after, she ordered State Farm and Safeco, a second company that announced it would raise rates, to halt the practice.

Safeco agreed to do so and to refund any excess money collected. State Farm still is negotiating with the department and has asked for a public hearing.

When four other insurance firms said they would pull out of the state because of Proposition 103, the commissioner said she would fight their action on the grounds that the law prohibits insurers from refusing to renew the policies of existing customers.

For the most part, Gillespie has been making her own decisions on how to respond to Proposition 103, consulting regularly with the governor’s staff and occasionally with Deukmejian himself, aides to the governor said.

“The governor has high regard for her professionalism and knowledge in this area,” said cabinet secretary David Caffrey. “She’s delightful, outspoken and she will always state her point of view. You never have to worry with Roxani about knowing where she’s coming from.”

As commissioner, Gillespie also meets frequently with representatives of the insurance industry. Last year, insurance groups gave her more than $1,000 to cover her travel and meal costs for conferences she attended with industry leaders.

But Gillespie said she does not talk with California’s organized consumer groups because she finds them to be “political.” Many consumer activists, she maintained, have a private agenda of replacing Deukmejian with a candidate more favorable to their cause.

Despite her rocky relationship with consumer groups, Gillespie said her most important accomplishment has been turning the department into an agency that helps consumers.

During her tenure, the department has beefed up programs to help policyholders with their individual insurance problems. The department has also begun releasing comparative price information that can help the public in buying insurance.

Gillespie’s critics say it has been political pressure from the public, consumer groups and legislators that has forced her to address consumer issues. But the commissioner said she has made these changes on her own.

Gillespie was born Roxani Manou in Athens in April, 1941, the same week the Germans marched into the Greek capital to begin their occupation of Greece. Her first memories, she said, are of World War II and the Greek civil war that followed.

Both her grandfathers were members of the Greek Parliament. One grandfather served for 40 years and became the speaker of Parliament. The other quit politics after nine years and devoted himself to translating ancient Greek plays into modern Greek.

Even so, Gillespie said politics did not rub off on her. Her father was a lawyer; her mother stayed home to raise Roxani and a younger sister.

Over the years, she learned to speak French, English, Russian, Italian and some Turkish, in addition to her native Greek. After finishing high school, she followed a conventional route and went straight to law school at the University of Athens.

In 1963, Chris Gillespie, a young engineer with Raytheon Co., went from Boston to Greece for a year to help set up a satellite repeater station. Gillespie’s uncle, who was Raytheon’s local representative, introduced the couple. At the end of Gillespie’s year in Greece, the two were married and moved to the United States.

In Massachusetts, she enrolled at Boston College of Law. Her first job as a lawyer was working for the Boston Legal Aid Society representing impoverished clients in landlord-tenant disputes, divorces and bankruptcies.

In 1970, the Gillespies and their two children moved to San Francisco. Eventually, she went to work for Industrial Indemnity as a claims adjuster.

Once she was licensed to practice law in California, she transferred to the insurance company’s legal department. From there, she worked her way up to vice president of the company and was put in charge of the San Jose division, becoming the industry’s highest-ranking woman in California.

Now that she has served for nearly six years in state government, she said she has no interest in going back to the insurance industry, unlike most commissioners before her. Becoming the president of an insurance company, even if such a position were available, would be too narrow after serving as commissioner, she said.

Her hope is to remain as commissioner for two more years and then join a law firm, teach or take another government post, such as a judgeship.

To Gillespie, the frequent complaint from consumer activists that she is a pawn of the insurance industry does not reflect at all how she sees herself.

“It’s almost like it’s a stereotype that they would like people to believe,” she said. “I have felt that a lot of the criticism has been addressed to a fictional commissioner and not to who I really am and what I really have done.”