By Thomas E. Hampton
Happy New Year! I am excited about the new year and honored to continue serving as the commissioner of the Department of Insurance, Securities and Banking (DISB) under Mayor Adrian M. Fenty.
In keeping with the mayor’s goals for 2008, DISB will continue providing efficient and effective regulation, consumer education and consumer services to District residents to create the best financial-service regulatory agency humanly possible. In 2007, we strategically modified our business operations and reallocated resources to focus more aggressively on consumer protection and operational efficiency. It is our job in 2008 to ensure the information and services we are developing are accessible by all District residents, regardless of where they reside or if they have access to computers. To do this, we have outlined three broad objectives for this year.
Objective I. Seek innovations to address the affordability and availability of health insurance coverage.
(a) Establish a District-owned captive insurance company to provide medical malpractice insurance coverage for nonprofit health centers. DISB will create a DC government-owned captive insurance company to provide medical malpractice liability insurance coverage to DC nonprofit community health centers. Since the closure of DC General Hospital in 2001, the District has become increasingly reliant on a network of nongovernmental clinics to provide preventive health care services to the District’s poorest and most vulnerable residents. DISB will assist in organizing the captive insurance company and engage a manager for its operations. The captive company is expected to be operational by September 2008.
(b) Propose legislation to establish a high-risk health insurance pool for District residents who cannot be medically underwritten by health insurance companies. DISB will submit proposed legislation to the Mayor’s Office to establish a high-risk health insurance pool that will provide coverage for residents who cannot receive health insurance in the commercial market. Successful implementation of this health high-risk pool will provide health insurance coverage for about 2,717 individuals.
Objective II: Reduce insurance, securities and banking fraud through prevention, detection and enforcement.
(a) Set up a financial crimes enforcement network to improve enforcement. In fiscal year 2007, reports of attempted financial-services fraud were on the rise, especially in the insurance, securities and mortgage industries. To improve our enforcement in 2008, DISB’s investigators will partner with the Metropolitan Police Department’s Financial Crimes Unit, the Office of the Attorney General and the Office of the US Attorney in a financial crimes enforcement network. This partnership will assist DISB in identifying criminal patterns and providing our investigators with information and investigative techniques that can be used to develop enforcement cases. DISB anticipates this interagency coordination will increase our enforcement cases by 20 percent during 2008.
(b) Create an agent enforcement process for insurance producers. DISB will develop a more efficient regulatory program to monitor the activity of our insurance producers. The Enforcement and Investigation Bureau had an increase in referrals for investigation of insurance producers who have been placed under restrictive orders by their states of residence. The program’s goal will be to protect DC residents from nonresident producers who have a license in the District but are restricted from doing business in their home states. District consumers will benefit from parallel enforcement actions brought by the nonresident agent’s home state and DISB. It is our intention to expand this program to include mortgage lenders and brokers, check cashers and money transmitters in fiscal year 2009.
Objective III. Improve consumer confidence in, and increase the availability of, financial services to District residents.
(a) Implement new pay day lending law. In 2007, the Council of the District of Columbia enacted new statute subjecting payday loans to the District’s 24 percent usury limit. This year, DISB will develop transitional procedures to terminate payday lending by check cashers currently authorized to make payday loans unless the check cashers apply for and obtain a Money Lenders license and comply with the usury statute. Additionally, DISB will develop and implement an enforcement program to verify lenders’ compliance with the new law.
(b) Develop a foreclosure mitigation program for homeowners facing mortgage default or foreclosure. DISB is developing a program to provide assistance to homeowners to prevent or mitigate mortgage defaults or foreclosures of their homes. Also, the program will examine and provide assistance on foreclosure alternatives, such as refinancing, loan workouts and reverse mortgages. The program will consist of education and counseling for borrowers facing foreclosure or other difficulties making mortgage payments. As part of the program, DISB plans to develop partnerships with pro bono legal services, lenders and nonprofit organizations such as NeighborWorks to expand assistance available to borrowers. DISB will provide information on foreclosures and mortgage default to at least 300 District residents.
(c) Establish a DISB Financial Literacy Council to provide financial education to consumers. DISB will participate in the establishment of a Financial Literacy Council in response to the pressing need for a citywide strategy on financial education and a coordinating body that ensures effective partner collaboration and efficient use of District resources. The council’s primary mission will be to improve the financial literacy and financial education of District residents by coordinating financial-education programs provided by the District, federal government agencies, private organizations, financial-services companies and nonprofits. DISB anticipates that this council will develop and coordinate financial literacy training and courses this fiscal year to more than 200 District residents.
As you can see, we are very committed to increasing information to educate and protect consumers as we take a multilayered approach to this important task. We look forward to working with you in 2008 as we keep putting our best foot forward so you can continue to rely on DISB to assist you in understanding financial-service issues and products.
Commissioner Thomas E. Hampton is the head of the District of Columbia Department of Insurance, Securities and Banking.