NU Online News Service, April 30, 2003, 4:54 p.m. EDT — New York
Insurers' boards must do more to make sure that insurance companies are financially strong, according to Massachusetts Insurance Commissioner Julianne Bowler.
Bowler described efforts by the Massachusetts Division of Insurance to improve board performance here at an insurance law seminar sponsored by the New York City bar association.
Division officials will be examining insurers' corporate governance, then ranking the insurers in terms of the order of the work that they need to do, Bowler said.
Bowler reported that, during a recent review of company management, Massachusetts regulators found that many board members did not understand the insurance business.
Many "lack basic knowledge of products, risks and statutory accounting," she added. For instance, she said, some directors could not say whether a current information technology system would support a new product.
In some cases, directors either "completely acquiesced to management or asked perfunctory questions," she said.
Bowler also faulted directors for failing to focus enough on statutory accounting. Directors should pay more attention to statutory accounting because that is the system that triggers regulatory action, Bowler said.
