The end of 2009 was supposed to bring a final determination by Washington, D.C.’s insurance regulators on whether the reserves of a CareFirst subsidiary were “unreasonably large,” as defined by law. Instead, the review will continue into this year.
Gennet Purcell
On Jan. 4, Gennet Purcell, commissioner of the District’s Department of Insurance, Securities and Banking (DISB) announced that “to appropriately serve the best interests” of residents, the department will make a final determination on the matter “at a later date,” according to a statement.
The DISB decision was scheduled to come no later than Dec. 31, 2009.
Purcell said in her statement that the “DISB will benefit greatly from the additional time to analyze and consider the hearing record and to collaborate with the Maryland Insurance Administration.”
A DISB spokesperson told IFAwebnews.com that the pending departure of Maryland Insurance Commissioner Ralph S. Tyler, who announced his resignation effective Jan. 8 to take a job at the U.S. Food and Drug Administration, was also a minor factor in the delay. The spokesperson said the DISB “felt it would be more prudent to work with the MIA’s new leadership.”
At issue is the $687 million in reserves of Group Hospitalization Services Inc. (GHMSI), which covers about 150,000 policyholders in the District, 700,000 in Maryland and 300,000 in Northern Virginia as a CareFirst subsidiary.
Last fall, District insurance regulators held a hearing analyzing the way Owings Mills, Md.-based CareFirst determines its reserves level using actuarial data. The hearing also explored the possibility of GHMSI redistributing the portion of the reserves attributable to District residents if the DISB found it to be “unreasonably large,” a characteristic outlined in a D.C. Council law, passed last year, addressing the insurer’s reserves.
Originally, the DISB was to announce its findings Sept. 30, 2009, but sought additional time to weigh all the information from hearings held earlier that month. Regulators then said they would defer their determination “to a time no later than Dec. 31, 2009,” according to a press release and orders issued by the DISB.
In November, the DISB reopened the record of its public hearings to include a report by The Invotex Group, a consulting firm hired by Maryland regulators who are also examining CareFirst reserve levels. That report, issued Nov. 4, 2009, found that the reserve levels for GHMSI and CareFirst of Maryland were not excessive.
Invotex staff also advised against apportioning “attributable” funds among Maryland, the District and Virginia, calling such a move, “a concept that has no financial meaning, applicability or relevance and should be reconsidered.”
D.C. regulators delay decision on CareFirst reserves to ‘later date’ via IFAwebnews .
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