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Department of Insurance, Securities and Banking

DISB Orders New Plan to Dedicate GHMSI Excess Surplus

Tuesday, June 14, 2016
Department asking for public comment on new plan for dedication of excess surplus to community health reinvestment.
Commissioner Stephen C. Taylor of the District of Columbia Department of Insurance, Securities and Banking (DISB) today issued an order in the 2011 Surplus Review and Determination for Group Hospitalization and Medical Services, Inc. (GHMSI), a nonprofit hospital and medical services corporation which operates as CareFirst in the District of Columbia, rejecting its plan to dedicate excess surplus to community health reinvestment.
The order also requires the Commissioner to develop a new plan to dedicate the excess surplus to community health reinvestment after a 30-day period of public comment. Any new rate increases requested by GHMSI would be denied for 12 months, or until a plan developed by the Commissioner is approved.  
In a December 30, 2014 decision, DISB’s former Acting Commissioner determined that GHMSI’s 2011 surplus of $963 million was excessive and that approximately $56 million of the excess surplus is attributable to the District. As required by the decision, GHMSI was directed to submit a plan for DISB’s review for the dedication of the excess surplus to community health reinvestment. 
GHMSI filed a plan on March 16, 2015 and contended that no distribution is needed because there was not excess surplus, and alternatively, GHMSI has spent more than $56 million – the excess surplus attributable to the District – in community health reinvestment in addition to incurring underwriting losses and experiencing a decline in surplus.
“DISB’s review of GHMSI’s plan and today’s order was another step in a complex and unique regulatory and insurance proceeding that required a considerable amount of time and effort to ensure that DISB obtained the correct result in an important segment of the District’s health insurance market,” said Commissioner Taylor. “Thanks to all interested parties for their patience as DISB worked through the multifaceted analysis and the many changes to the regulatory environment since the December 2014 decision. I look forward to receiving the public’s comments for the new plan.”
The Commissioner is required by law to review GHMSI’s surplus (the amount by which its admitted assets exceed its liabilities, including reserves) at least once every three years to determine whether it is excessive. Upon finding excess surplus, the Commissioner is required to order GHMSI to submit a plan that dedicates the excess surplus attributable to the District to community health reinvestment in a fair and equitable manner.
To view today’s order, follow this link. To view all documents related to the 2011 GHMSI surplus review, visit
The public can submit comments to the Commissioner by mail at the address below or by email at [email protected]. The comment period will close on July 14. 
Stephen C. Taylor, Commissioner
Re: GHMSI 2011 Surplus Review
Department of Insurance, Securities and Banking
810 First St., NE, Suite 701
Washington, DC 20002