Health insurance caps blasted in state official's email

By Robert Weisman, Globe Staff

The official in charge of monitoring insurer solvency at the Division of Insurance sent an internal e-mail this spring warning that rates the state imposed on health plans could lead to "a train wreck" in the insurance industry.

Shortly after the division rejected proposed double-digit rate increases for small businesses and individuals, Robert G. Dynan, the division's deputy commissioner for financial analysis, wrote to members of his staff on April 6 that "our jobs of monitoring solvency just got exponentially more difficult" as a result of the rate cap.

After Commissioner Joseph G. Murphy chided Dynan for making statements that were "unprofessional and counterproductive," Dynan sent Murphy a letter apologizing for "the selection of words I used to express my private opinion" about the impact of rate disapprovals.

Dynan was out of the office today and could not be reached, a colleague at the state insurance division said..

Murphy, in an interview, said Dynan continues to work at the division, but heads up a unit that was not involved in setting rates. Murphy said insurers themselves have agreed their solvency would not be threatened this year by the state denial of their proposed rates.

"We are monitoring the situation extremely closely," Murphy said. "Financial solvency is the bedrock of state insurance regulation. By their own projections, none of the insurers said they would be insolvent this year if their rates weren't approved.".

The internal dispute with the insurance division "is very serious and should not be taken lightly," said Lora Pellegrini, president of the Massachusetts Association of Health Plans, a trade group representing most state heath insurers. Pellegrini said the Patrick administration's rate caps are forcing insurers to lose money on their policies..

"These concerns rasied by the deputy commissioner are very much the same kinds of concerns the health plans raised," she said.