Accreditation is urged for Md. insurance panel

August 30, 1994|By Patricia Meisol | Patricia Meisol,Sun Staff Writer

A year after giving the Maryland Insurance Administration a failing grade for policing the industry it is charged with overseeing, a national regulatory association is recommending accreditation of the state agency in light of what appears to be a remarkable turnaround.

A team from the National Association of Insurance Commissioners (NAIC) ended a weeklong inspection of the state agency in Baltimore last week by recommending that the Maryland agency be approved for accreditation when the national body meets this fall.

The stamp of approval, to be voted on when the NAIC meets the tTC week of Sept. 18 in Minneapolis, signaled that Maryland was now equipped with enough experts and systems to spot financially weak insurers and take action to protect consumers. It also serves to reassure other states that depend on Maryland to police the 115 companies based here that sell their products across the country.

The NAIC team recommended that Maryland be accredited for the maximum five years instead of the one year given to many other states, said Maryland Insurance Commissioner Dwight K. Bartlett.

"The team leader, a man who has done many of these, told me he has never seen an agency turn around so quickly," Mr. Bartlett said yesterday.

To win accreditation, states must meet minimum standards set by the NAIC for regular examinations of companies' finances by qualified experts.

One key reason for problems in Maryland historically has been a lack of funds. People with the expertise needed to oversee large insurers could not be attracted with the salaries set for state employees.

After its initial audit, the NAIC detailed the administration's deficiencies last August, shortly after Mr. Bartlett took over. The state agency failed the accreditation at that time.

A key to the turnaround was a change in state law that removed technical, professional and advisory positions from the state employees' salary system and gave the insurance commissioner the latitude to set salaries.

"We made quite liberal use of that," Mr. Bartlett said.

Beginning last summer and armed with a 35 percent increase in its budget, the insurance administration began to hire certified public accountants and other people with advanced financial skills to replace and expand its examinations and auditing staff. The department's reformation was led by Ilona Klasons, a former top regulator in Maryland and national consultant to insurance regulators who was rehired last year as associate commissioner of examinations and auditing.

The Maryland Insurance Administration is now authorized to employ 245 people, up from 170 when its ability to oversee insurance companies was called into question.

The NAIC began insisting four years ago that state regulatory agencies meet minimum standards for regulating insurance companies. So far, 35 states and the District of Columbia have been accredited, and all 50 states have passed laws aimed at improving insurance regulation.

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