Weak insurance watchdog

September 09, 1993|By EDITORIAL

Maryland's insurance regulatory office is such a weak watchdog it's doubtful this dog could bark, much less bite. That's the conclusion of a highly critical study conducted by the National Association of Insurance Commissioners. Giving this watchdog teeth will take time, money and commitment. But so far, state officials are off to a promising start. A new insurance regulator (Dwight K. Bartlett III) has been hired to run a newly independent agency (the Maryland Insurance Administration) with an expanded budget (up 20 percent, to $9 million) and an enlarged staff (230 instead of 178).

That there were big troubles in the state's insurance division was no surprise. Former commissioner John A. Donaho had been pleading for years for more high-tech equipment, more skilled manpower to conduct detailed audits and analyze complex insurance data and more funding to train his staffers in all the technicalities of reinsurance, investment and actuarial issues and basic insurance accounting. But neither the governor nor the legislature apparently heard him. There's no crisis, they seemed to be saying, so why worry?

Suddenly, though, there was plenty of reason to worry. Unless Maryland wins NAIC approval, many of the state's locally based insurers might move elsewhere to avoid having to get their books audited in dozens of other states: Other states might not accept the audit findings of Maryland's feeble insurance watchdog.

With that threat looming, the governor and state legislators quickly turned into regulatory boosters, approving a tax on insurance companies to pay for more auditors and examiners and freeing the insurance division from the bureaucratic clutches of the Department of Licensing and Regulation. Mr. Donaho, though, had rubbed too many officials the wrong way. He was summarily fired in April.

It is alarming that elected officials would allow the state's lone insurance overseer to reach such a low point that the agency didn't even have the manpower or the expertise to investigate financial weaknesses or regulatory violations -- or even the ability to spot such problems. Shame on them. But they now have a way to atone for their sins: A long-term commitment to Mr. Bartlett and his efforts to strengthen the insurance administration within the next year -- in time to win NAIC accreditation by Christmas, 1994.

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