DISB Approves Two Businesses for CAPCO Funding
In early December 2009, DISB approved two businesses for CAPCO funding. DC BioDiesel, first approved by DISB to receive CAPCO funds in September 2009, was approved to receive a follow-on investment from Advantage Capital. DC BioDiesel is an alternative energy company that plans to collect and convert waste vegetable oil from restaurants, universities and other businesses, and blend the oil with fossil diesel fuel to make biodiesel fuel. DC Biodiesel is also in discussions with WMATA to provide biodiesel for its diesel municipal bus fleet. More than 1,000 WMATA buses use over 11 million gallons of diesel fuel per year. DC Biodiesel’s first plant, to be located in the District, will have an annual capacity of 5 million gallons. GreenlightAC was also approved to receive a loan from Advantage Capital. Greenlight designs, sells, installs and maintains electric vehicle and plug-in hybrid electric vehicle recharging stations to be installed in commercial office buildings, apartment buildings, universities, hospitals, sports arenas and municipal parking lots. The DC Certified Capital Company (CAPCO) program is an effort by the District of Columbia to increase private capital investment in the city's new or expanding small businesses. For more information, visit DISB’s website at this link.
DISB Issues Bulletin Prohibiting Domestic Violence for Underwriting Insurance
DISB recently issued a bulletin to inform licensed insurance providers that they are prohibited from using domestic violence or spousal abuse as a deciding factor when issuing life or health insurance policies. The bulletin instructed insurance providers that District government law prohibits the use of information about abuse or one’s status as a victim of domestic violence to cancel, refuse to underwrite or renew, or refuse to issue a policy of life insurance or health insurance policy.
Similarly, the information cannot be used to increase rates or deny claims. Domestic violence can never be used as a rating factor for policies of life insurance or health benefits plans. The bulletin comes on the heels of a recent study that cited the District of Columbia as one of nine jurisdictions that does not prohibit the use of domestic violence as a preexisting condition for underwriting insurance. The bulletin is to ensure District licensees will stay within the requirements of the law for all life, health and health benefits plans. For a copy of the Bulletin 09-IB-05-10-08*
Any questions, please contact Associate Commissioner for Insurance Philip Barlow at (202) 442-7823 or firstname.lastname@example.org.
DISB Now Participates in the Nationwide Mortgage Licensing System
Since August 2009, DISB has required all mortgage lenders, brokers and loan originators to have a complete record in the Nationwide Mortgage Licensing System (NMLS), and submit it to DISB for approval. Any company or individual wishing to apply for a first-time mortgage lender, broker and loan originator license must do so through the NMLS, which was developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators. DISB, a member in both, became part of the new regulatory framework to provide improved supervision and regulation of the mortgage industry. The NMLS will allow mortgage lenders, brokers and loan originators to apply for, and manage their license electronically. The NMLS will assist the District of Columbia in providing better supervision of the mortgage industry to better protect consumers. The NMLS, which began operations January 2, 2008, is a secured, Web-based system that allows mortgage lenders, brokers and loan originators to apply for, amend, update or renew licenses online in the District of Columbia and in other participating states. More complete information about the Nationwide Mortgage Licensing System can be found online at stateregulatoryregistry.org.
DISB Issues Bulletin on Impact of Same-Sex Marriage Law on Insurance
In July, DISB issued a bulletin informing licensed insurance providers of the enactment of a new law on marriage and domestic partnerships, which may impact insurance coverage eligibility. The bulletin stated that insurance companies licensed to do business in the city must include in the policies coverage for the same-sex spouse or same-sex domestic partner of the insured, according to the new law. The law was applicable to health insurance policies as well as life, auto and home insurance policies. The bulletin instructed them to apply requirements of the law to all policies, issued or renewed, regardless of the description of the relationship as a civil union or domestic partnership. Mayor Adrian M. Fenty signed a law recognizing same-sex marriages in the District of Columbia in December. In July, he had signed the law recognizing such marriages performed in other states or countries. In response to this law, the new bulletin states that insurance products covering the spouse of a primary insurance policyholder must also cover the same-sex spouse or same-sex domestic partner of the insured in the same manner.
New DISB Commissioner Confirmed by Council
In a unanimous vote, the Council of the District of Columbia voted early November to confirm Acting Commissioner Gennet Purcell as Commissioner for the District of Columbia Department of Insurance, Securities and Banking (DISB). She was appointed August 28, 2009, by Mayor Adrian M. Fenty. Commissioner Purcell, who served as DISB’s Deputy Commissioner since 2008, is an attorney and member of both the State of Maryland Bar and the Commonwealth of Virginia Bar. During her tenure as deputy, she has shown strong commitment to consumer protection and access to financial services. She is working to ensure that financial-services in the District are more affordable and accessible; that the agency continues to protect and educate investors and consumers; that banking services are expanded to all communities; that partnerships in enforcement and investigation are enhanced; and that the momentum of captive insurance in the District is ongoing. Commissioner Purcell earned an undergraduate degree in political science from York University, and her Juris Doctor degree from Howard University School of Law. She is a long-time resident of the District of Columbia, residing in Ward 1 with her husband and their three children.
Financial Crisis Commission Starts Inquiries
The special independent commission set up by the US Congress to investigate the causes of the financial crisis held its first public hearings early January 2010. The commission, based on the one that investigated the causes of the September 2001 terrorist attacks, has a December 15, 2010, deadline to present its findings and conclusions. This is similar to the Pecora congressional subcommittee that examined the Stock Market Crash of 1929. The Pecora investigation uncovered fraudulent and unscrupulous practices on Wall Street that undermined the financial system. That congressional investigation contributed to the development of the regulatory system that governed the country’s financial markets for decades.
This commission will produce a detailed and clear-eyed examination of what went wrong, which is needed to bring accountability to a financial system that rewards unduly risky behavior, and to help inform Congress as it moves forward with common sense reforms to prevent these crises from happening in the future. It will be a bipartisan commission comprising 10 independent experts with significant experience in banking, market regulation, taxation, finance, economics, housing and consumer protection. The commission will hold hearings, can issue subpoenas for witness testimony or documents and must report its findings and conclusions to Congress. It will look at a broad range of areas, including the role of fraud and abuse in the financial sector, state and federal regulatory enforcement; credit rating agencies; lending practices and securitization; corporate governance and executive compensation; federal housing policy; derivatives; GSEs; and short-selling, among others. The commission is also required to examine the causes of major financial institutions that failed or were likely to fail without government assistance.
NAIC Releases Annual Homeowners Insurance Report
The National Association of Insurance Commissioners (NAIC) released December 29, 2009, its 2007 Homeowners Insurance Report, providing data on market distribution and average cost by policy form and amount of insurance. The report includes countrywide and state-specific premium and exposure information for non-commercial dwelling fire insurance and for homeowners insurance package policies. It also contains descriptions of the data and a discussion about the way certain economic, demographic and natural phenomena impact the price of homeowners insurance. The data in the report includes written exposures (earned house years) and aggregate written premiums by state and countrywide for the 2007 data year. It includes three tables that show individual state and countrywide exposures by policy type, individual policy form, as well as amount of insurance coverage, divided into ranges with percentages of total exposures provided for each range.
Data from the report was collected from insurance statistical agents for all states except Texas and California, both of which directly supply data to the NAIC. The Florida data excludes policies written by Citizen's Property Insurance Corporation, the state's insurer of last resort, and therefore are not directly comparable to those of other states.
Highlights of the report, which are available for viewing in the NAIC's Newsroom, include:
The tables shown contain countrywide exposures, premiums and average premiums for several different types of policies. The entire report has, among its many features, a state by state breakdown of this information. The full report (publication code: HMR-ZU-09) is available for purchase through the NAIC Store.
DISB Finalizes Settlement Agreement with Wachovia
DISB Commissioner Gennet Purcell signed a final Consent Order in October requiring Wachovia Securities to complete or confirm its repurchase of auction-rate securities (ARS) from District of Columbia clients to settle allegations that the firm’s securities dealers misled investors about the safety of the ARS market. Although marketed and sold to investors as safe, liquid, and cash-like investments, ARS are actually long-term investments subject to complex auction processes that failed in early 2008, leading to illiquidity and lower interest rates for investors. Also, the order requires Wachovia to pay a fine of more than $300,000 to the District of Columbia. The fined amount represents the District’s pro-rata share of a $50 million settlement negotiated by a multistate task force of state regulators formed by the North American Securities Administrators Association. During the investigation, regulators discovered that Wachovia’s securities dealers failed to adequately inform customers and train employees on the risks associated with buying ARS. The Consent Order is the final step in the District’s ARS case against Wachovia, which was tentatively settled February 2009. However, this is the first of other settlements that DISB is actively negotiating related to ARS sold in the District of Columbia by other Wall Street firms.
DISB Releases 2007/2008 Biennial Report
DISB in early November released its fiscal years 2007/2008 Biennial Report. Using the theme, “Protecting Your Financial Interests,” the report highlights the collaborative efforts of the agency in the middle of a devastating and arguably unparalleled downturn in the US economy. DISB Commissioner Gennet Purcell said the report showcases the dynamic and responsive leadership demonstrated by the agency following major financial events. The 52-page report, covering October1, 2006 to September 30, 2008, includes DISB’s notable achievements and progress in the areas of financial solvency and stability, market regulation, fraud enforcement, spurring economic development, its legislative agenda, modernization, consumer outreach and advocacy, and promoting the District’s Green Agenda. Released during DISB’s third observance of Health Insurance Awareness Month, the report will continue DISB’s branding and social marketing campaign, which was launched 2007, to continue increasing the public’s awareness of the agency as a great resource on financial matters. To view an electronic version of the DISB Biennial Report.