A “precipitous increase” in proposed 2002 NAIC data-base fees compels the National Association of Mutual Insurance Companies (NAMIC) to express its “justifiable outrage” and call for restraint, especially in light of the economic consequences of the Sept. 11 terrorist attacks on America.
William D. Boyd, NAMIC’s financial regulation manager, presented those comments during a conference call with the NAIC.
Boyd commented that “NAMIC’s membership is struck-and is surely not alone-by the precipitous increase in data-base fees proposed for imposition at a time when almost every other commercial entity in the United States must carefully consider current and prospective expenses and those prices or fees with which it will face the market.”
Boyd said the “Magnitude of increase may in itself be a reason for our reservation with the budgeted increase in data-base fees; yet, even before the events of September 11, the U. S. economy and the fortunes of the industry were, if not recessionary, then clearly weakening. NAMIC member companies witnessing an NAIC that is either utterly insensitive to the ambient economy or believing that the economy is not relevant for NAIC purposes, have justifiable outrage at such precipitous increases. And many of those companies would say with respect to NAIC fees that there is no competitor from which to seek better prices.”
The NAIC memo shows revenues increasing 5.42 percent per annum on a compound basis in the period 1996 through 2002 and expenses increasing 5.82 percent per annum on a compound basis for the same period. A look at the Bureau of Labor Statistics’ consumer price index for all urban consumers shows a 2.47 percent per annum increase from Sept. 1996, through Sept. 2001 on a compound basis.
Boyd commented that NAMIC is urging the application of moderation and reason now to preclude the increases now intended and portrayed in the budget document.
“The world is not static, but we believe there is reason for a back-to-basics discipline to be applied to NAIC programs,” Boyd said. “A first step, consonant with our belief that the NAIC needs at this moment to apply restraint to its budget, is to re-assess need for what are identified as ‘new initiatives.’
“The degree of growth in the NAIC budget-over a number of years-and the unacceptably precipitous increases in data-base fees proposed for 2002 to support that growth, cause us to ask that this budget be fully reconsidered by state regulators.”
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