Fork in the road on insurance

March 25, 1992

The Maryland House and Senate, backing substantively different bills to reorganize the Insurance Division, are each still headed for the same destination.

The House bill would create an independent, self-funding regulatory entity supported by fees, penalties and a surtax on Maryland insurers. Much of this funding would go to improve monitoring and processing capabilities necessary for national accreditation. There would also be a major effort to combat insurance fraud.

The Senate version, inexplicably, stops short of autonomy. It provides that the insurance commissioner be appointed by the governor and that money raised for the division's funds cannot be used by the Department of Licensing and Regulation for any other purpose. It does not, however, remove the agency from the meddling of DLR's secretary, William Fogle: It would continue to operate as a unit of Mr. Fogle's department. An additional problem is that the complex method of allocating fees and surtaxes would hamstring the use of the surtax for fraud prevention. It would not solve this vexing problem.

We think the House bill represents the best path. Financial and administrative independence would allow this important regulator to move quickly to gain national accreditation and to combat insurance fraud. The Senate plan would hinder these objectives. There would be less money to fight fraud, and cases would become mired in the already overburdened criminal courts. It would also impede the march to accreditation by inserting a tit-for-tat retaliatory clause that would impose tough standards on companies domiciled in states that penalize unaccredited Maryland insurers.

There's a chasm between these approaches. The two bills need to be speedily sent to a conference committee, where they can be fashioned into a workable -- and necessary -- reform for an agency that has a profound impact on the lives of most Marylanders.

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