ANNAPOLIS -- The agency charged with keeping Maryland's insurance companies safe and sound is beset with management and resource problems, according to a study. The report also found the agency unable to properly represent the interests of consumers or to be sure that companies can pay their claims.
The study by the Department of Fiscal Services, discussed at a hearing before lawmakers yesterday, portrays a state Insurance Division with problems in "organizational structure, resources, management, staffing and procedures."
"These deficiencies have resulted in poor regulatory performance and generally inadequate levels of public protection and service," according to the study, part of the legislature's process for evaluating state agencies.
Insurance Commissioner John A. Donaho disputed the findings, calling the report's author inexperienced and bemoaning the paucity of funding for key jobs within the division.
Delegate Casper R. Taylor Jr., D-Allegany, chairman of the House Economic Matters Committee that called the hearing, said, "I think basically we've got good, sound regulation in this state. We should not lead the public to believe that things are falling apart."
But he said that the study "has uncovered the problems that exist when you don't have enough people, when you don't have enough money" to regulate the industry.
The 108 insurers based in Maryland wrote $2.93 billion in premiums last year. Another $9.75 billion in premiums were sold in Maryland by out-of-state companies.
The report argues that while the Insurance Division might need more funding, it isn't putting to good use the resources it has. The study found that:
* The division suffers from poor communication among its regulatory units, inefficient collection of taxes and a poor working relationship with the secretary of the Department of Licensing and Regulation.
* Mr. Donaho twice reorganized his staff without approval from the proper state agencies, but told lawmakers he had received approval.
* The division has done an inadequate job of investigating and tracking consumer complaints.