Stunning Insurance Turnaround

September 04, 1994

In the past year, Dwight K. Bartlett III has engineered a stunning turnaround in the Maryland Insurance Administration. Last fall, the agency flunked an examination by a national accreditation group. But last month, the agency was re-examined and drew rave reviews -- so much so that the examiners are recommending a lengthy five-year accreditation certificate.

Such a certificate is critical for Maryland insurance companies and for those who purchase insurance. It gives assurance that the state's regulatory agency has the equipment and enough experts and systems to spot financially weak insurers and to act to protect consumers. Some 115 locally headquartered insurance companies were in jeopardy of being forced to move to another state before the MIA won national accreditation.

Now that danger has passed. Local insurers can breathe easily, knowing that other states will accept the regulatory judgment of an accredited Maryland Insurance Administration as a valid passport.

How did the Maryland agency go so quickly from horrid to exemplary? For years, then-commissioner John A. Donaho warned his agency was being denied the money to oversee the && complex insurance industry. A rigid bureaucracy made it impossible to pay high enough salaries to attract experts. A meddlesome licensing secretary kept butting in.

Only when it became clear Maryland might lose many of its home-grown insurers did officials act. Local insurers agreed to be taxed to pay for more auditors and examiners. The insurance agency was given independence from the bureaucrats: Actuaries and CPAs could be hired at salaries far above the norm for state workers. The staff was expanded by 20 percent.

But Mr. Donaho became too confrontational. He was fired. Mr. Bartlett was hired to shake things up. He created a new management team and brought in modern equipment and accounting systems. He recruited employees with advanced financial skills. His agency was given its independence from licensing secretary William Fogle.

The result is a regulatory agency with the tools and the expertise to police the fast-changing insurance industry. It's the kind of assurance consumers and insurers wanted all along.

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