NU Online News Service, Jan. 11, 11:11 a.m. EST

The Risk and Insurance Management Society expressed initial reservations regarding New York Governor Andrew Cuomo's proposal to merge the New York State Insurance Department (NYSID) with other departments into a combined Department of Financial Regulation (DIFR).

RIMS said today it recognizes the validity of the stated goals—reducing costs and increasing efficiency—but added that it is concerned the NYSID's consumer protection mission may be weakened in the process of merging the departments.

On Jan. 5, Gov. Andrew M. Cuomo delivered his State-of-the-State address, where he proposed folding the Department of Insurance into two other regulatory agencies, the Department of Banking and the Consumer Protection Agency.

John Phelps, board liaison, RIMS External Affairs Committee, and director, business risk solutions, Blue Cross and Blue Shield of Florida Inc., told NU Online News Service that RIMS is sympathetic to the need for government "at all levels to search for savings, administrative and otherwise. This is a product of the economic times in which we live."

He added, "Having said that, we wouldn't want the state's quest for administrative savings to override the consumer protection interests that have long been the hallmark of the New York State Insurance Department," which he said has earned respect throughout the country.

The department, he emphasized, needs to "maintain its principles regarding consumer protection from regulatory insolvency concerns and transparency."

Mr. Phelps also observed that this is "certainly an issue that we're going to see in other states as well, as the state budgets continue to constrict." Whatever the state, he emphasized that its insurance department needs to maintain its constant focus on protecting consumers "from regulatory insolvency concerns and transparency that we have battled over for the past few years."

Gov. Cuomo's plan received initial praise from the New York Insurance Association, with Ellen Melchionni, the association's president, stating, "We are very encouraged and hope the efficiency in new agency will be created."

Special Reports /

RIMS Questions Cuomo's NYSID Consolidation Proposal

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