Name: Marilyn Shannon McConaghy
Age: 47
Position: Director, Rhode Island Department of Business Regulation
Background: DBR executive counsel since 1997. Partner, Tillinghast Licht & Semonoff, 1985 to 1997, concentrating on business law and government relations. R.I. State Senator, 1981 to 1984, representing District 41 (Scituate, Exeter, Foster, Glocester, Coventry, and West Greenwich).
Education: University of Rhode Island (1975); Boston College Law School (1978).
Family: Married, one child
Residence: Pawtucket
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PBN: In general, Rhode Island has been criticized for regulatory processes that are extraordinarily slow. What is the DBR doing to increase efficiency?
McCONAGHY: From what I have seen, Rhode Island is much quicker in terms of its turnaround time for license applications and rate and form filing approvals. We have a number of processes and procedures in place, we readily take their calls, we answer their inquiries, and they receive acknowledgment of receipts where that’s appropriate. We give them regular status reports if they inquire about where things are so I have not seen that as a big problem here – and it is in other states that are much bigger.
What is DBR’s role in trying to make Rhode Island a more business friendly state?
Our primary concern is making sure that the people who apply to us for approvals and those that we regulate after approvals get the level of service that will give us a reputation of being a business friendly community. That doesn’t always mean they get the answer that they want, but means that they’re treated courteously, professionally efficiently and if an answer has to be no that they understand the reason why and what appeals processes are available to them. We try to treat regulated entities in a similar fashion so that one doesn’t feel like another industry or regulated entity is getting preferential treatment. Everyone is treated fairly and professionally and courteously.
Is there a brief way to describe the DBR and its role?
I wish. The DBR is a creature of statute. We are an entity that regulates whatever entities the legislature has decided in its wisdom to require us to regulate. And over the years that has evolved in a way that we regulate a whole disparate range of industries, some related and some completely unrelated. It has been done over the years in piecemeal fashion. The legislature decides as it should what industries are appropriately regulated by us as opposed to the Registry, for example, the car dealers are over there, but we have the auto body. Or the PUC [Public Utilities Commission] for rate hikes, little pieces of the auto body industry are over at the PUC for towing. So to answer your question, no, there is no simple way to define what we do.
Besides regulating three major industries- insurance, banking and securities – the DBR also licenses nearly two dozen professions and businesses and is the state’s racing and athletics commission. Do you think such broad oversight is effective?
Yes and I’ll tell you why. Our department is set up by divisions, and each of those divisions, along with commercial licensing, are set up as separate, distinct divisions. Each one of them has an associate director or superintendent. All of those people are co-equals and they all report directly to me. In light of recent federal legislation, the Gramm-Leach-Bliley Act, which addresses securities, banking and insurance as well as the real estate appraisers, to some extent, we have now the luxury of having all of those regulatory functions in-house, here, so we don’t have to worry about interagency coordination of efforts. All of those people that are going to be responsible for regulating those areas and carrying out the charges under Gramm-Leach-Bliley sit here within these buildings. So I think we’ll see some real efficiencies in accomplishing what the state needs to accomplish.
What is the Gramm-Leach-Bliley Act?
A financial modernization act passed by Congress in 1999 that addresses many of the issues that are raised by “one stop shopping” of banking and brokering and sale of insurance, and what cautions, what steps are needed to protect the consuming public from such things as sharing of information between non-affiliated entities. So that if you’re going to open a checking account or you give them some information in connection with your mortgage, are they going to be able to see information that they got in connection with your life insurance, in respect to your health, in deciding whether or not to sell you some other product. Protections that are currently in the marketplace or have been in the marketplace [exist] because you went to your insurance agent for your insurance and you went to your bank for your banking and you went to your broker [for those needs]. That information was not historically shared. Now with these various types of businesses being done in one place [there is a need] to protect the consumer so that the information is used appropriately and not to the consumer’s disadvantage. And there’s a balance.
So what are the major issues you see facing the DBR?
We have a number of things that we’re going to work on from a regulatory perspective that arise out Gramm-Leach-Bliley, in areas such as privacy where you have a blurring of the lines between banking, insurance and securities and real estate appraisers. The other issue under Gramm-Leach-Bliley is uniform producer licensing and company licensing. There are requirements in there that will make it necessary for the state to take certain steps toward a uniform licensing process for both producers and companies. Right now if you’re a company that does business in 50 states you probably have 50 applications that you need to fill out. Gramm-Leach-Bliley says that’s really not acceptable. The states need to move toward a more uniform system. The other issue under Gramm-Leach-Bliley is something they refer to as speed to market, and that is to expedite rate and form filings so that companies are not disadvantaged by having undue delay in states for approval of their rates and their forms, so they can bring a product to market quicker.
Under the Small Group Reform bill that was recently passed by the R.I. Legislature we’re charged to develop by regulation the basic health benefit plan that’s referred to in that statute [in consultation with the Department of Human Services]. So we’re in the process of doing that, we have to have that done by the fall. The legislature also passed something called the Risk Based Capitol bill – it was actually introduced at the Department’s request – that will give us another regulatory tool and impose additional reporting requirements on companies that do business in the state. It will allow us to evaluate financial information and the financial health and stability of a company and give us certain regulatory authority to take certain steps if a company falls below certain benchmarks or targets.
Attorney General Sheldon Whitehouse, who headed DBR from 1992 to 1994, said last year that the new DBR director should be “proactive” and not just “sit back and regulate.” Are you that person?
I drive Anthony [V. Arico Jr., DBR Deputy Director] crazy with my proactivity. I’ve had the luxury if you will of having been here for two and a half years [as executive council] before I started as director. I have had the opportunity to see what the issues are in each of the divisions. I’ve already started under prior directors with legislative initiatives that I think will help us be more pro-business, that I think will help us be more user friendly and that will help the department itself run more efficiently and smoothly. So I have all of those ideas that have either already started or will start soon.
Can you say what these new regulations are?
I prefer not to, because the legislative process that we use requires us to introduce all of our proposals through the governor’s staff by October 1. So before he hears it from you I think he should hear it from me. But nothing draconian, no one should fear it. There are things that are either required by federal law or that will make our current operations more efficient and business friendly.
I had a really hard time finding the DBR’s Web page and once I did was shocked that it was so limited, especially considering the hefty sites offered by other state departments. Why?
I don’t even think we had a Web page until we had the Harvard Pilgrim crisis, [which] required us to move forward faster than our technology plan had originally envisioned because we needed to have a site available for people who needed information on a regular basis. We have just received $150,000 from the legislature effective July 1 for the development of a Web page. Our first step is to have a non-interactive site that will be informational only. Ideally, when we grow up and get more money, we hope to move to “Stage 2,” which will be the interactive Web site where people will actually be able to do online transactions. And when we really grow up we’ll be able to do everything over the Internet. So we’re in the infant stage.
With technology so crucial to business, why has it taken so long?
With every department it’s a question of priorities, it’s as simple as that, and for us, there were other things where the funds needed to be directed. We just spent about 18 months updating all of the computer hardware and software, [spending] over half a million dollars. Before we could get to the point where we had a Web page we needed to have the computer infrastructure. It was only within the last 12 months that the legal division got computers that were actually useful, something other than a box, [computers] that actually had the Internet on it. Before that it was our telephone system that was obsolete. So we’ve had to take our funds and prioritize them.
