Maryland Insurance Commissioner Alfred W. Redmer Jr., who has maintained for months that such action would violate federal law, took no position on the bill in testimony before the Senate Finance Committee yesterday. But he told lawmakers that his office is working with the administrators of the federal flood insurance program on a memorandum of understanding to address many of the complaints from Isabel victims.
The Senate committee heard testimony yesterday on 11 bills and resolutions stemming from Tropical Storm Isabel. Baltimore County Executive James T. Smith Jr. and Sen. Norman K. Stone, a Dundalk Democrat, spoke in favor of all of the measures, which would create a people's counsel for insurance issues, require continuing education for flood insurance agents, regulate some insurance adjusters and prevent homeowners' insurance companies from charging full rates for policies covering damaged homes.
Insurance industry lobbyists offered mixed reactions to the measures. Redmer supported most of them.
He said that if the bill requiring his office to regulate flood insurance carriers passes, he will consult the attorney general to determine what powers he could use without violating federal law. But he said he doesn't believe that applying the state's Unfair Claims Settlement Practices Act to flood insurance carriers would solve most Isabel victims' problems anyway.
Smith, who has criticized Redmer for not regulating flood insurance agents and adjusters, said passing that bill would provide immediate help to victims. The Insurance Administration could then act more aggressively to speed payments, he said.
"The only argument I have heard against this bill is that the state might get sued," Smith said. "This is a state that hasn't backed down against big tobacco. This is a state that hasn't backed down against big polluters. I hope this state will not back down from insurance companies."
D. Robert Enten, a lobbyist for the Property Casualty Insurers Association of America, testified that holding flood insurance agents to state regulations would put them in an untenable position.
"You would put us in a position of trying to comply with a state law that could put us in violation of a federal law, and complying with a federal law that would put us in violation of a state law," he said.
James Shortley, claims director for the National Flood Insurance Program, said last week that he believes federal law pre-empts the kind of state regulation that Smith is pursuing.
Insurance industry representatives also opposed the bill creating a people's counsel, paid for by a surcharge on insurance policies, to act as an advocate for consumers on rate increases and policy disputes. Senate President Thomas V. Mike Miller, the measure's sponsor, said that role cannot be fulfilled by the Maryland Insurance Administration.
"This is about little people, little people who don't have an advocate," Miller said. Redmer and insurance lobbyists testified that the office would be redundant.
Industry representatives testified in favor of some of the proposals, saying for example that consumers should be given easy-to-understand summaries of their policies. They also defended the industry's conduct in the wake of the storm.
"I think, generally speaking, we're pretty proud of the process," Enten said. "We handled tens of thousands of claims without complaint."
Bernice Myer, a resident of Millers Island in eastern Baltimore County and the founder of the Isabel Victims Citizens Group, said that victims of the storm from Maryland, Virginia and North Carolina got "pretty well kicked around" by the insurance companies.
"The insurance companies need someone outside to keep their feet on the ground," she said. "We're not paying these premiums for their protection. We're paying them for our protection."
The National Flood Insurance Program, which requires periodic reauthorization by Congress, is the subject of a Senate subcommittee hearing scheduled for tomorrow.