Transparency Bill Would Shine Light on Tens Of Millions in Fees Paid for Pa Insurance Department’s Outside Consultants
This month, the Pennsylvania legislature is considering measures to shine a bright light on the untold millions of dollars the Pennsylvania Insurance Department (“Department”) is charging Pennsylvania-based insurance companies to pay for the Department’s outside consultants. Under a bill that has passed the House and is awaiting action by the Senate, the Department would be required to disclose how much insurance companies are paying for the Department’s consultants to conduct examinations of the companies. The consultant fees absorbed by the Pennsylvania-based companies are believed to be in excess of tens of millions of dollars each year, but the exact amount remains a mystery because they are paid directly to the consultants and not accounted for in the Insurance Department’s budget or elsewhere. Industry trade groups have been calling for transparency about these exponentially increasing costs, arguing that there is already no cap on them, and without even knowing how much is being charged to the companies for these contracted regulatory functions, there cannot be complete accountability for the costs and efficiencies of the Department’s work. These undisclosed expenses are ultimately passed down to consumers and, to the extent they contribute to a more expensive regulatory system than in other states, may have the effect of making Pennsylvania insurance companies less competitive than their out-of-state neighbors.