Insurers Group Sues State of New York

January 14, 2010

A trade group for insurers in New York is suing the state, claiming lawmakers are illegally using assessments paid by insurers to fund unrelated state activities.

At issue is the state’s use of the so-called “332 assessments,” which are paid by insurers and, according to the NYIA, are by law only to be used for the expenses of the New York State Insurance Department (NYSID).

NYIA President Ellen Melchionni said the state has been improperly using this money to fund other state agencies and programs for over a decade. In its suit, the NYIA says the state has dramatically increased the use of “sub-allocations” to transfer assessment money to non-insurance related state agencies.

“The assessment increase is a financial hardship to New York domestic insurers, but what is especially galling is that the increase is being used in ways that are blatantly contrary to what the law stipulates,” Melchionni said. “The state is treating the 332 assessment as a bottomless ATM for programs that may be worthy but cannot legally be funded… Ultimately consumers pay the price, and the state is brazenly ignoring their interests.”

The current state budget includes $455 million in assessments on insurers with $317 million in sub-allocations to other state agencies, the NYIA said. Ten years ago, the group said, sub-allocations totaled only $14 million.

Since 2008 the assessments on domestic insurers have nearly doubled and the department’s budget earmarked for sub-allocations nearly tripled, the group said.

The New York State Insurance Department declined to comment on the suit.


Source: NYIA

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