When the insurance and banking departments were merged into the new Department of Financial Services in New York in 2011, more than 150 years of history and tradition were seemingly lost. Some would argue that this loss was not significant, and that the merger was necessary to bring the regulation of insurance into the modern world and to recognize its essential financial nature. Others would argue that the merger has unnecessarily destroyed one of the best and most respected insurance regulatory departments in the US. While the “truth” is probably somewhere in between, one thing is certain: the current administration has little use for the past when it comes to reporting on the insurance business in the state.
Take, for instance, the required annual report of the superintendent on the business of insurance. Under the old insurance department, the annual report was a treasure trove of information — statistical and narrative — about the business of insurance. In the decade before the merger, the insurance department report generally ran close to or more than 250 pages on practically every element of the business — life, health, property/casualty, surplus lines, free zone, brokerage, licensing, examinations, etc., etc. Last year, the new department of financial services (DFS) issued its first report following the merger. As I discussed in my Insight column (“DFS Report: Size and Content May Send Message”) in the June 18, 2012 issue of Insurance Advocate magazine, the first DFS annual report was a about half the length of the last insurance department report, with only about one third of it — roughly 40 pages — dealing with insurance, and much of it dealing with the merger and the accomplishments of the DFS rather than discussing the industry. I suggested at the time that because of the merger it was perhaps not fair to prematurely judge the report.
We now have the second DFS annual report in hand and, as discussed in my Insight column in the July issue of IA (“Less is Not More”), incredibly the report is a mere shadow OF LAST YEAR’S REPORT! “While last year’s DFS report could be viewed as the Readers’ Digest version, the newly filed report is barely the Cliffs Notes version!” As discussed in my column, the report continues to be more about the DFS rather than the industries it regulates, thus turning the statutory requirement for the report on its head. By so doing, the DFS does a disservice to the insurance industry, the consumer, and the standing of the DFS in the regulatory community.