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.
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
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.
1.3 Organizational Chart
Division of Insurance
The Administration Department works closely with the Human Resources department of the Office of Consumer Affairs and Business Regulation on all aspects of managing the Division's workforce, including hiring, promoting, and training. In addition, working with the Division's Labor Relations Counsel, the Administration department responds to various labor relations issues, including employee complaints, grievances and other activities. As of December 31, 2008, the DOI employed 129.27 full time equivalent (FTE) staff.
The Administration Department works closely with the Budget Department of the Administrative Services Unit of the Office of Consumer Affairs and Business Regulation on the Division's budget, the Governor's budget recommendation for House 1, the allocation of funds into lower subsidiaries and the management of the spending throughout the year.
Revenue & Assessments
The Division of Insurance collects revenue from individuals and companies as part of its statutory responsibilities. In addition, the Division also bills assessments to the industry and collects these funds for the General Fund. Most revenue collected from companies and individuals comes from application and filing fees as well as some fines and penalties.
Taken together, these revenues and assessments are typically nine to ten times greater than the annual budget appropriation for the Division. In Fiscal Year 2008, the Division of Insurance collected a grand total of more than $115 million.
Budget, Revenue and Assessment figures on this page are from the 2008 Fiscal Year - July 1, 2007 through June 30, 2008.
A Bargain for Taxpayers
2007 Staffing & Budget National Rank:
A Bargain for Taxpayers
Insurance Written in Massachusetts
According to a 2008 survey by the National Association of Insurance Commissioners (NAIC), Massachusetts ranks 10 th among 56 U.S. states and territories with respect to premium written by domestic insurers.
Considering that the Commonwealth's population is much smaller than the other states in the top 10, Massachusetts shoulders a disproportionate share of the responsibility to regulate U.S. insurers. In fact, by most any measure of regulatory performance, the Massachusetts Division of Insurance does more with less. Compared to most other states, the Division represents a relative bargain for taxpayers, policyholders and insurers in the Commonwealth.
The Division of Insurance does more…
1.6 The Massachusetts Insurance Marketplace
In 2008, Massachusetts was the domicile of:
· 59 property & casualty insurers
· 19 life, accident and health insurers
· 3 title insurance companies
· 10 health maintenance organizations
· 2 lodge fraternal organizations
· 3 medical service corporations
· 24 workers' compensation self-insured groups
· 4 residual market pools
· 162 fraternal benefit and mutual aid societies
Company Market Share
Among the scores of insurance products marketed and sold in Massachusetts, certain lines of insurance represent the lion's share of premium and policies. Premium written under Accident and Health, Homeowner's, Life, Automobile and Worker's Compensation policies make up approximately 50% of all premium written in the Commonwealth. With the exception of Private Passenger Automobile Insurance, most lines of insurance operate with diverse markets. Consumers can choose from among large numbers of competing companies.
Top 10% of Selected Market Sectors
* Most health insurance is offered through Health Maintenance Organizations (HMOs). For HMO market share data, see appendix C-20