New York, aware of the mandates of the federal government’s Patient Protection and Affordable Care Act and Dodd-Frank’s marshaling of insurance information, and under the scrutiny of the Treasury Department's Federal Insurance Office (FIO), is wasting no time in highlighting the efficiency of its own regulatory efforts to make insurers stay accountable to consumers.
The state Department of Financial Services (DFS) trumpeted its win in having health insurers publicly disclose rate increases and in having life insurers return tens of millions of dollars in unpaid death benefits to consumers as part of its statutorily required report to Gov. Andrew Cuomo and the state legislature at year-end.
The report shows the DFS, in existence since Oct. 3, 2011, acted aggressively in working towards its goals, which cover all aspects of insurance and banking regulation. Work began in May 2011 to integrate the state's Banking and Insurance Departments.
Much of the reason for the merger was budget-driven, and the report, sent DFS Superintendent Benjamin Lawsky, noted that the department is now on track to reduce spending by more than 10% in its first year.
Last October, the DFS ordered that all rate applications submitted by health insurers as part of the prior approval process be made public to consumers. Initially, health insurers claimed that their requests for health insurance premium increases should be confidential, but, after discussions with Lawsky, the health insurance industry withdrew its objections to the Department’s order and agreed to make details of rate increase requests public.
For more on the DFS' efforts to make health rate increase requests public, see: http://www.lifehealthpro.com/2011/10/17/ny-attempting-end-to-health-insurers-rate-secrecy.
On the Social Security death master file front (a sore spot for the life insurance industry) DFS investigations prompted life insurers to now regularly match life insurance policies against a reliable death list, rather than simply waiting for beneficiaries to file claims, the report said. DFS found that many insurers had used the death file to stop annuity payments once a contract holder died, but had not used it to determine if death benefit payments were owed to beneficiaries under life insurance policies, annuity contracts, or retained asset accounts. See: http://www.lifehealthpro.com/2011/11/04/unclaimed-property-probe-escalates.
The DFS required life insurers to perform cross-checks of all life insurance policies, annuity contracts and retained asset accounts using the latest updated version of the death file, or another database or service at least as comprehensive as the SSA-DMF, to identify any death benefit payments.
Lawsky also pointed out in the DFS Working Group report the pre-DFS implementation of new regulations that deregulate most insurance business with large, sophisticated companies or public entities as an advance in reducing the red tape involved in selling insurance to “sophisticated buyers.”
On Aug, 17, 2011, Cuomo signed as Chapter 490 of the Laws of 2011 a law whereby insurers are exempted from rate filing and form approval requirements when issuing qualified policies to businesses or entities (e.g., municipalities) that generate annual commercial risk insurance premiums totaling more than $25,000 for certain kinds of property and casualty insurance.
ALthough the DFS was not formed officially until October, the Working Group has been meeting since late spring with representatives of the insurance and banking industry, as well as trade associations and consumer groups, to identify ways that the new DFS could regulate more efficiently and effectively.
To that end, the DFS is implementing numerous improvements to streamline its process for the review of rate, policy, license and other industry filings.
Lawsky also touted other advances made recently under his leadership, such as reducing medical malpractice costs by implementing the Medical Indemnity Fund. The Fund will pay costs of medical care for infants who are injured at birth, disaster relief efforts around Tropical Storm Irene and spotlighted the DFS for compelling FEMA to clarify national policy that state regulators will continue to play a central role in ensuring that flood victims are treated properly, fairly, and expeditiously under the National Flood Insurance Program.
Lawsky also had to take on mortgage servicing reform and made clear his ambitions there, as well, by noting he was making these reforms in New York the industry standard going forward.
What will Lawsky and his DFS take on in 2012? Whatever it is, expect the DFS to adhere to the old adage, Go Big, or Go Home.