Overview
The Division of Insurance (DOI), located at 1000 Washington Street in Boston, was established in accordance with Chapter 26 of the Massachusetts General Laws and is one of five agencies overseen by the Office of Consumer Affairs and Business Regulation. DOI operates under the direction of the Commissioner of Insurance, who is appointed by the Governor.
DOI’s mission is to regulate the Commonwealth’s insurance industry, including but not limited to its domestic1 and foreign2 insurers, business entities, health maintenance organizations, insurance producers, and brokers. As of April 2018, there were approximately 1,600 insurers licensed, authorized, or eligible to conduct business in the Commonwealth. According to its website,
The DOI 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. We also investigate and enforce state laws and regulations pertaining to insurance and respond to consumer inquiries and complaints. The DOI provides the public with information regarding various types of insurance through [its] website and assorted publications.
Annually, DOI receives a budget appropriation from the Massachusetts Legislature (line item 7006-0020), the amount of which is then assessed through the agency’s operations assessments upon the insurers it regulates to reimburse the Commonwealth, in accordance with Section 8C of Chapter 26 of the General Laws:
The commissioner of insurance may make an assessment in each fiscal year against all licensed insurers in the commonwealth. Said assessments shall be made at a rate as shall be determined and certified annually by the commissioner as sufficient to produce revenue to reimburse the commonwealth for funds appropriated for the operation of the division of insurance, hereinafter called the division, less any revenues which were received by the commonwealth under the provisions of section eight B and section fourteen of chapter one hundred and seventy-five, but in no event shall said assessment exceed the sum of two million dollars. Three-fourths of the amount to be so assessed shall be made against all licensed domestic companies and foreign companies in proportion to their net premiums written and annuity considerations in the commonwealth as shown in the annual report of each of said insurers filed with the division;3 and, in addition, one-fourth of said amount shall be made against all licensed domestic companies in proportion to their net premiums written and annuity considerations as shown in the annual report of each of said insurers filed with the division.
Said assessment shall reimburse the commonwealth for funds appropriated for the prior fiscal year.
Assessments under this section shall be charged to the normal operating cost of each company.
In addition to the financial solvency of insurers, DOI also monitors how insurers interact with their customers and policyholders to ensure that they are treated fairly and in accordance with contracts, state laws, and regulations. DOI’s Market Conduct Team accomplishes this through both comprehensive and limited-scope examinations. These examinations include staff interviews and reviews of various processes within an insurer, the results of which are documented in a report issued by DOI. These examinations are discretionary; they are typically conducted with a financial examination of the state’s domestic insurers.
Because DOI can only complete a limited number of comprehensive exams annually, the Market Conduct Team continually performs market conduct analyses of numerous insurers throughout the year. The team uses information from the National Association of Insurance Commissioners (NAIC) to examine business practices such as ratings, policy underwriting, policy cancellations, claim settlements, and advertising. NAIC provides DOI with a summary of this information, identifying insurers that are outliers in various areas that may pose a potential risk to consumers. Market conduct analysis allows DOI to identify insurers that warrant further inspection or, in some cases, regulatory action.
DOI had a staff of 129 employees at the end of fiscal year 2017 and 123 employees at the end of fiscal year 2018. The staff included professionals such as attorneys, auditors, accountants, insurance examiners, and support personnel. DOI’s appropriations for fiscal years 2017 and 2018 were $13.6 million and $13.3 million, respectively.
| Date published: | August 21, 2019 |
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