By Thomas E. Hampton

At the beginning of 2007, DISB strategically modified our business operations and reallocated resources to focus more aggressively on consumer protection and operational efficiency. We adopted a three-pronged Approach to Consumer Protection, which encompasses all aspects of our work—business regulation, consumer empowerment and consumer services. 

Business Regulation: A key focus of our work is continued improvement of operational efficiency and adaptability to changes in financial markets. Some examples of improvements include:

• Upgraded licensing systems for insurance entities and securities investment advisers providing additional staff review time to focus on licensee responses.
• Focused investigation on scammers who strip the equity from homeowners, and commit mortgage, insurance and securities fraud on our residents.
• Increased examinations of investment advisers and their representatives to make sure they are accountable to their clients and their financial well-being.
• Participated in the development of a national licensing system for mortgage lenders and brokers and consolidated the license applications for non-bank financial institutions into a single uniform application for all categories, thus reducing processing time and simplifying the process for applicants.

Consumer Empowerment: Through timely and targeted communication on financial-service issues, we provided important information to empower our consumers to make better choices in personal finance and fend off the bad players. DISB’s consumer empowerment work consisted of the following key activities:

• Year-round public education through consumer tips, fraud alerts, consumer newsletters, free publications and DISB’s Web site.
• Face-to-face interactions including more than 60 events such as community presentations, meetings and information fairs in all eight wards for different segments of residents.
• Monthly financial seminars at DISB and the MLK Library in partnership with community organizations.
• Theme months and special campaigns to focus on special issues. New for 2007 are the “Insure U for Small Business” and the “Wise and Safe Investing” targeting seniors, in addition to the first Health Insurance Awareness Month in the District.
• Year-round media coverage in some of the region’s top media outlets such as The Washington Post and The Washington Times; community newspapers like the Senior Beacon, The Washington Informer and East of the River; and broadcast media such as the “Kojo Nnamdi Show” on WAMU, “Mind Over Money” on WUSA TV9. Our senior fraud summit continues to generate great response every time it airs on the District government’s station Channel 16.

Consumer Services: A true test of our consumer protection work is in our responsiveness to consumers’ concerns and our ability to solve their problems. We have:

• Made consumer complaint services better known to the public and provided more prompt resolutions.
• Hired a consumer advocate to focus on improving our connection with the communities and ensuring our quality service delivery.
• Developed a comprehensive process for resolving enforcement actions against insurance producers that violated our law and as a result, conducted more hearings this year than in the past five years and revoked licenses of some producers.
• Responded to the subprime mortgage crisis affecting some of our licensed mortgage lenders and brokers as well as homeowners, including the following measures:

a. Coordinated with other state regulators to find alternative funding for 72 loan commitments for District borrowers in the pipeline because of bankruptcy filing by a mortgage lender.
b. Commissioned a subprime mortgage lending study to better understand the effects of the defaults and possible foreclosures caused by mortgage lending.
c. Signed onto the subprime lending guidance developed by the Conference of State Bank Supervisors to promote consistent regulation in the mortgage market and to address emerging risks in subprime lending.

• Supported the payday lending legislation that placed a 24 percent Annual Percentage Rate (APR) cap on fees. We are working with financial institutions to develop small consumer loans below the 24 percent APR limit.

In addition to consumer protection measures, we continued to work on making DISB a household name by publishing the first DISB Biennial Report as a combined financial regulatory agency, and launching an integrated branding campaign to introduce DISB to hard-to-reach residents including those who feel disconnected from their local government. 

In 2007, the mayor had several pieces of insurance legislation introduced in the Council of the District of Columbia. The Interstate Insurance Product Regulation Compact Act will enable the District of Columbia to become a member of the Compact that approves certain life, annuity and disability products in a uniformed basis. The Producer Licensing Amendment Act will establish uniformity with national standards as it relates to the licensing of insurance producers. Our goal is to continue to protect consumers by regulating effectively and efficiently and these bills will assist in this effort.

With our advantages as the capital city and our efficient regulatory process, the District of Columbia continues to enjoy the reputation as one of the leading jurisdictions for captive insurance companies, having licensed 76 companies so far. With the reduction in new captives being formed nationwide, DISB is working on attracting captives to re-domesticate from a non-US domicile by making our laws and procedures more in sync with market changes. 

I am confident that our groundwork in all the above areas will bring us a more productive year ahead. Happy holidays and I look forward to working with you in 2008! 

Commissioner Thomas E. Hampton is the head of the District of Columbia Department of Insurance, Securities and Banking.