State’s insurance regulators given poor marks

Friday, Sept. 1, 2000 | 11:31 a.m.

CARSON CITY -- A national consumer group has given Nevada's Insurance Commission failing marks for its ability to regulate the industry.

Consumer Federation released a nationwide survey Thursday ranking Nevada, Arizona, Georgia, Indiana, South Dakota, Tennessee and Utah as having the least adequate supervision of insurance companies for their tax dollars.

The federation based its survey on the money available to state insurance agencies, said J. Robert Hunter, director of insurance for the Consumer Federation, said.

"Some of these states are terribly short. States must upgrade their resource levels," he said.

State Insurance Commissioner Alice Molasky-Arman disagreed with the findings.

"I'm sorry they (Consumer Federation) chose to score us that way," she said today. "I do think our services, regardless of the money, are equal to or superior than in any other state."

Molasky-Arman conceded the staff size may not meet the national criteria set by Consumer Federation, which publishes Consumer Reports. But she added that Nevada is the fastest-growing state in the nation, and "We're always playing catch-up," in getting new employees.

"Our governor and the Legislature has been quick to recognize the problems we have over at the insurance division," she said.

The budget for the agency is $3.6 million a year, most of it coming from the state general fund with some money received from assessments on the industry. It regulates insurance agents, brokers and other professional to ensure the market is free of misleading, unfair and monopolistic business practices. It also oversees companies to make sure they are financially solvent.

In addition, she said some other state insurance regulatory agencies also supervise banks or other businesses. And that may skewer the funding formula of the federation. These other states may put added money into the division because it has added responsibilities, thereby inflating the money it receives.

To meet the standard set by the federation, a state department's budget must equal at least 10 percent of the tax revenues collected by the state from insurance premiums paid by residents. The federation said Nevada gets only 3.8 percent of the money collected from the insurance industry. The national average is 7.7 percent.

There is no federal regulator of the insurance industry, unlike banking and securities, the consumer organization said.

The rankings were released after some allegations that insurance companies practiced racial discrimination by charging blacks higher premiums based on their race.

On protecting the public, Molasky-Arman pointed out the four consumer officers in Las Vegas and the three in Carson City field 4,000 calls a month, and there is a professional staff to help when a complex problem arises.

And most insurance regulatory matters are public, as opposed to other states, she said. "When we find difficulty in an insurance company or an HMO, it's public," she said, adding some other commissions take their disciplinary actions behind closed doors.

She thinks the Consumer Federation used the findings of a survey by the National Association of Insurance Commissioners, which collects information on resources, staff, budget and other items.

"I think we stack up pretty well," said Molasky-Arman. "We have a superb staff who believes in what they are doing. They are serving the public."

This survey, which also was conducted in 1988, 1993 and 1998, is the first to be done since last November's enactment of sweeping legislation that removed Depression-era barriers so that banks, brokerage firms and insurance companies could get into each other's business. Banks, for example may now sell insurance policies.

Consumer Federation officials said there have been some improvements in state agencies in their budgets, periodic examinations of insurance companies, consumer education programs and state hiring of actuaries who calculate risks, life expectancies and other factors. But the organization said must work needs to be done.

The Associated Press contributed to this story.