The National Association of Insurance Commissioners released its proposed budget for 2007. The consolidated budget calls for a projected $63.4 million in total revenue, an increase of 6.81 percent from 2006 budget levels and $62.7 million in total expenses, a 6.24 percent increase from the 2006 budget.
A public hearing to discuss the financial plan, via conference call, is scheduled for Nov. 1, 2006.
“In producing the NAIC budget, we strive to be as clear as possible in outlining our activities and initiatives for the upcoming year,” said Catherine J. Weatherford, NAIC Executive Vice President and CEO.
Weatherford said the group has budgeted for significant growth in affiliate operations, the formation of the Interstate Insurance Product Regulation Commission, increased infrastructure costs necessary to maintain existing and emergency technical environments and a one-time request to host a significant international event.
The latter event is the 2007 International Association of Insurance Supervisors (IAIS) Annual Conference, an event that will not be repeated in subsequent budgets. The conference adds an additional $642,775 or a 1.1 percent increase in both revenues and expenses.
“The NAIC follows a careful budget process, one that focuses on the advancement of state-based insurance regulation for the betterment of insurance consumers and the industry,” said NAIC President and Maine Insurance Superintendent Alessandro Iuppa. “The 2007 budget directly translates into support of regulatory initiatives and the NAIC’s business strategy plan, which is designed to meet the NAIC’s mission, values and goals.”
The significant revenue changes from 2006 to 2007 include:
Incorporated in Database Fees is a CPI-equivalent adjustment to the group and individual filing fee caps. The group filing fee cap will increase $6,849 to a total of $208,284, impacting 25 companies. The individual filing fee cap for companies with a premium volume in excess of $2.7 billion will increase $2,283 to a total of $69,428, impacting 107 companies.
Services revenue includes an increase in SERFF transaction volumes and a CPI adjustment applied to the revenue neutral proposal for the annual non-rated filing fee revenue target for the Securities Valuation Office (SVO), which resulted in price increases in some SVO filing fees in lieu of an increase in the SVO Assessment billing. The largest increase will be $300, with the others at or below $100.
Other Income will increase as a result of the renegotiated NAIC/National Insurance Producer Registry (NIPR) services agreement effective Jan. 1, 2006.
Highlights of significant expense changes from 2006 to 2007:
Salaries include an average annual increase of 3.7 percent on base salaries offset by a factor for turnover. It also includes a promotion and adjustments line equal to 1 percent of salaries.
Employee Benefits will decrease from the 2006 budget.
Occupancy expenses will increase in 2007. The NAIC will exercise a five-year option for additional space at its headquarters in Kansas City to accommodate existing and anticipated growth in affiliate operations.
The complete NAIC 2007 proposed budget can be accessed from the NAIC Web site at www.naic.org.
The National Association of Insurance Commissioners (NAIC) is a voluntary organization of the chief insurance regulatory officials of the 50 states, the District of Columbia and the five U.S. territories.
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