Insurance Reform In The News

Consumers will soon be able to learn how much their insurance companies are paying top executives.

Nonnie S. Burnes, the state's commissioner of insurance, is now requiring all insurance companies - including those that provide health, property, and auto insurance - to report how much compensation the top 10 executives receive at each insurer. The disclosures must be included in the companies' financial filings for 2007, which are due by March 1.

Burnes said Massachusetts previously had compelled companies to disclose the compensation information, but the requirement was dropped about 10 years ago.

"This is an important piece of information for us and for the public to know," Burnes said. "There is a national debate about executive compensation, and Massachusetts can participate in this discussion if the companies are required to submit this information."

Burnes said consumers might want to consider how much a company's executives earn before choosing an insurer. "In the insurance area, this is a whopping expense that presumably will filter down to the rates," she said.

Public charities and nonprofit companies such as Blue Cross and Blue Shield of Massachusetts, the state's largest health insurer, must file statements with the attorney general showing how much their top five executives earn in salary, bonus, and other compensation. Insurance executives said that many other states also require executive pay to be disclosed.

Consumer advocates praised the move by Burnes.

"This is a terrific thing for consumers," said Barbara Anthony, executive director of Health Law Advocates, a Boston nonprofit that assists consumers in disputes with health insurers. "The more transparency, the better."

Anthony said insurance company directors might "think twice and scrutinize pay packages more carefully" if they know the compensation is going to be publicly disclosed.

Said Deirdre Cummings, legislative director of the Massachusetts Public Interest Research Group, "Consumers make better choices when they get access to meaningful information."

It's especially important to disclose executive pay at insurance companies that contract with the state, Cummings said: "Our tax dollars are going to that business, and pay to executives is information that taxpayers should have."

Frank O'Brien, vice president of the Property Casualty Insurers Association, which represents more than 1,000 companies nationwide, said his organization does not object to the requirement.

"Other states require it," O'Brien said. "From the industry's point of view, we've always had to do it and it's no big deal."

Originally, the disclosures were intended to ensure that executive pay didn't compromise the financial health of smaller insurance companies, O'Brien said. Now, he said, officials at some Massachusetts insurance companies might be interested in seeing what their competitors are paying.

Consumers who want to view salary information will have to request companies' annual filings at the Division of Insurance offices in Boston. There are no plans to post the information on the Internet.

Jeffrey Krasner can be reached at krasner@globe.com