Former insurance executive Eleanor Kitzman is Gov. Mark Sanford’s pick to run the state agency that regulates the industry.

Kitzman, 48, is the founder and former president of Driver’s Choice Insurance. She sold the auto insurance company in 2002 and remained as president until October.

Sanford said he selected Kitzman because she met his four criteria for a cabinet-level position. He wanted someone from outside the political sphere with credibility in the business world, a commitment to service and a commitment to free markets.

While working in North Carolina in 1997, Kitzman testified at the S.C. State House in support of rule changes designed to spur competition among auto insurers.

“What was important was we were deregulating and bringing competition in the auto market to South Carolina,” she said.

For Sanford, a free-market approach to insurance regulation really means deregulation.

Last year, the state’s insurance laws were loosened again, this time for homeowners policies. Insurance companies are now allowed to raise rates by 7 percent without getting approval. The idea was by doing this, more insurance companies would do business in the state.

For coastal areas especially, Sanford said, competition is an important part of creating a viable insurance market. In Kitzman, Sanford has a new insurance director who believes strongly in the free market.

“Competition may not be a panacea, but it solves most problems,” Kitzman said Wednesday.

Sanford also said he wanted somebody who could approach the job with the energy, if not also the knowledge, possessed by former director Ernst Csiszar, the only holdover from Gov. Jim Hodges’ administration. Csiszar left the post in August to become head of the Property and Casualty Insurers Association of America.

“Ernie is irreplaceable,” Sanford said. “He had an extraordinary breadth.”

As insurance director, Csiszar championed deregulating the state’s auto and homeowners insurance markets.

Sanford said Csiszar was one of the many people who recommended Kitzman, because of her resume and being somewhat of an outsider.

“We believe, in any organization, new blood is a wonderful thing,” Sanford said.

Kitzman comes from what was described as a humble background in Houston.

A single mother , she earned a bachelor’s degree at the University of Houston in 1984 and a law degree at the South Texas College of Law in 1986, all while raising her son, Andy Neal, 31, who is now an attorney in Austin, Texas.

Before entering the insurance business, Kitzman worked as a briefing attorney with the Texas Supreme Court.

In private practice, she did some insurance regulatory work before joining such insurers as E. W. Blanch, USF&G and GEICO.

In 1999, Kitzman started her own auto insurance company, Driver’s Choice, with one office and five employees. Today, the insurer employs 45 workers at five locations.

Bruce White, a spokesman for State Farm Insurance, said Kitzman is well established among the state’s insurers as somebody who has worked to improve competition.

“She has all the tools to do a really great job,” White said.

The Insurance Department regulates almost 2,000 companies doing business in the state. The agency’s 2004 budget was $6.8 million. As commissioner, Csiszar made $100,074.

Reach Werner at (803) 771-8509 or bwerner@thestate.com.