Maryland To Monitor Private Insurers' Governance

By Michael Ha

NU Online News Service, April 12, 9:54 a.m.EDT?Maryland is starting a program to monitor and improvecorporate-governance policies of mutual or closely held insurersincorporated in the state that fall outside the scope ofSarbanes-Oxley requirements.[@@]

Commenting on his department's new initiative, Maryland'sinsurance commissioner Alfred Redmer noted that while corporatescandals of the past few years have produced laws and regulationsto strengthen the duties of corporate directors and officers, theserequirements do not extend to non-public insurers.

"Most of these laws apply only to Securities and ExchangeCommission regulated public insurance companies," Mr. Redmercommented. "Because many of Maryland's domestic insurance companiesare mutual, non-profit or closely held, the rules made under theSarbanes-Oxley Act, the SEC and other entities do not apply."

Mr. Redmer said the Maryland insurance administration's programwill focus mostly on small and midsized insurers "that are notsubject to SEC laws and regulations, including the Sarbanes-OxleyAct."

The purpose of this program, the commissioner added, is to makesure that board members are aware of their fiduciaryresponsibilities and obtain the necessary information and expertiseto carry out their responsibilities.

"Our aim is to have strong, independent, knowledgeabledirectors," Mr. Redmer told National Underwriter. "We justwant to make sure that the companies understand what board members'responsibilities are and make sure that everyone's on the samepage."

"Our goal," Mr. Redmer said, "is not to punish or intimidatecompanies or board members." Rather, he explained, his program isdesigned to help strengthen insurers' internal controls andprocedures. "I believe that having strong, independent andknowledgeable directors is one of the best ways to protectpolicyholders," Mr. Redmer said.