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Division of Insurance 2008 Annual Report 1

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Division of Insurance 2008 Annual Report 1 Commonwealth of Massachusetts Division of Insurance 2008 Annual Report Nonnie S. Burnes Commissioner of Insurance www.mass.gov\doi Table of Contents 1. Division of Insurance .......................................................................................................1 Mission ................................................................................................................................................ 1 Primary Activities ................................................................................................................................. 1 Organizational Chart ........................................................................................................................... 3 Human Resources ............................................................................................................................... 3 Budget, Revenue & Assessments ....................................................................................................... 4 The Massachusetts Insurance Marketplace ........................................................................................ 7 2. Significant Events of 2008 ............................................................................................. 10 Automobile Insurance Reform ........................................................................................................... 10 Global Financial Crisis ....................................................................................................................... 13 3. Administration ................................................................................................................ 15 4. Financial Surveillance & Company Licensing .............................................................. 20 5. Financial Examinations .................................................................................................. 24 6. Market Conduct .............................................................................................................. 29 7. Producer Licensing ........................................................................................................ 32 8. State Rating Bureau ....................................................................................................... 35 Private Passenger Automobile .......................................................................................................... 36 Workers’ Compensation .................................................................................................................... 38 Home Insurance ................................................................................................................................ 40 Medical Malpractice Insurance .......................................................................................................... 43 Credit Insurance ................................................................................................................................ 44 Health Insurance ............................................................................................................................... 45 Policy Form Review ........................................................................................................................... 50 9. Consumer Service .......................................................................................................... 53 Online Consumer Publications .......................................................................................................... 60 10. Board of Appeal .............................................................................................................. 61 11. Legal Division ................................................................................................................. 63 Special Investigations & Enforcement ............................................................................................... 68 12. Information Technology ................................................................................................. 70 13. National Association of Insurance Commissioner Activity ......................................... 73 Appendix A: Acts, Regulations & Bulletins......................................................................... A-1 Appendix B: Massachusetts Domestic Companies Select Financial Information ............ B-1 Appendix C: Direct Written Premium by Line of Insurance ............................................... C-1 Division of Insurance 2008 Annual Report 1 1 - Division of Insurance The Division of Insurance administers the laws of the Commonwealth as they pertain to the protection of the insurance consumer through the regulation of the insurance industry. The Division monitors financial solvency; licenses insurance companies and producers; reviews and approves rates and forms; and coordinates the takeover and liquidation of insolvent insurance companies and the rehabilitation of financially troubled companies. The Division also investigate and enforce state laws and regulations pertaining to insurance and respond to consumer inquiries and complaints. The Division provides the public with information regarding various types of insurance through its website and assorted publications. 1.1 Mission The primary mission of the Division of Insurance is to monitor the solvency of its licensees in order to promote a healthy, responsive and willing marketplace for consumers who purchase insurance products. Protection of consumer interests is of prime importance. The Division safeguards these interests by providing accurate and unbiased information so consumers may make informed decisions and by intervening on behalf of consumers who believe they have been victimized by unfair business practices. 1.2 Primary Activities The Division of Insurance protects consumers and promotes a fiscally sound insurance marketplace through the performance of six primary activities. Taken together, these activities represent the core of effective insurance regulation. License Insurance Companies Examine Financial License Condition of Insurance Insurance Producers Companies Healthy Marketplace for Examine Consumers Regulate Market Insurance Conduct of Policy Forms, Insurance Rates and Companies Programs Resolve Insurance Consumer Complaints 1- Division of Insurance 2 Division of Insurance 2008 Annual Report License Insurance Companies The process of licensing insurance carriers promotes a marketplace of solvent, fiscally sound companies through the review and analysis of filings and financial statements. Examine the Financial Condition of Insurance Companies The Division monitors the financial condition of insurance carriers through quarterly financial analyses. This process provides an early warning of possible financial problems so that appropriate regulatory action can be taken before the extreme situation of an insolvency. The monitoring process also includes periodic on-site financial examinations of all domestic carriers to value assets, determine liabilities and verify compliance with applicable statutes and regulations. Examine the Market Conduct of Insurance Companies Beyond the financial health of an insurer, the Division also examines how the company interacts with policyholders and potential customers. The market conduct process looks beyond the financial condition of a company by examining business practices such as policy underwriting and rating practices; cancellations and non-renewals; claim settlements; original insurance applications; and advertising materials. The goal of these examinations is to confirm that Massachusetts consumers are treated with fairness and according to the terms of the insurance contract. Regulate Insurance Policy Forms, Rates and Programs By reviewing and approving insurance policy forms, rules, rates, and associated program procedures and operations, the Division verifies that insurance products sold to Massachusetts consumers by licensed insurance companies comply with the laws and regulations of the Commonwealth. License Insurance Producers and Others The process of licensing insurance producers and other key participants in the insurance industry allows the Division to promote a marketplace where individuals and firms conducting the business of insurance are qualified and that they conduct business within the requirements of the laws and regulations of the Commonwealth. Resolve Insurance Consumer Complaints The Division provides the general public with a non-judicial alternative for pursuing complaints against insurance companies and producers. Every consumer submitting a complaint receives a reply and a resolution that is consistent with Massachusetts law. 1 - Division of Insurance Division of Insurance 2008 Annual Report 3 1.3 Organizational Chart Commissioner of Insurance Nonnie S. Burnes First Deputy Commissioner Joseph G. Murphy Deputy Commissioner State Rating Bureau & Bureau of Health Care Policy Form Review Health Care Access Bureau Managed Care Access Bureau Section Kevin Beagan Nancy Schwartz, Director Nancy Schwartz, Director Edward Charbonnier Deputy Commissioner Financial Examinations Market Conduct Section Financial Examinations Section Matt Regan, Director John Turchi (Acting) John Turchi (Acting) Deputy Commissioner Financial Surveillance & Financial Analysis Company Licensing Robert Dynan Robert Dynan Deputy Commissioner Special Investigations Legal Division Board of Appeals General Counsel Unit Elisabeth Ditomassi Bill Best,
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