The Property Casualty Insurers Association of America (PCI) is urging the National Association of Insurance Commissioners (NAIC) to eliminate the annual $1.58 million Securities Valuation Office (SVO) industry assessment.
The NAIC held a public hearing yesterday as part of the process of adopting tis budget for 2008 at the Houston Winter Meeting on Dec. 2. The 2008 budget proposes revenues and expenses of $68.2 million and $66.4 million, respectively. The proposed budget forecasts revenue growth of 4.9 percent over the 2007 budget, while the NAIC’s expense budget is projected to grow by 2.3 percent.
“While there is progress in increasing the overall openness of the budget process, we are concerned about the continued existence of the SVO assessment and the long-term growth of the NAIC budget,” said Steve Broadie, vice president, financial legislation and regulation for PCI. “This assessment was intended to be a short-term solution to a funding issue that occurred in 2004 with the use of rating agencies to rate securities bought by insurers. For the past two years we have urged the NAIC to consider the elimination of this fee. We are pleased that the Internal Administration Subcommittee decided to appoint a new working group to revisit the SVO’s fee structure and the need for this assessment.”
Over the past several years, PCI has expressed concern about the growth of the NAIC budget. “Although the NAIC has worked to keep budget growth under control,” said Broadie, “we suggest that the group form a new working group with public participation to discuss and oversee the consideration of long-term revenue and expense issues. Cost containment must continue to be a top priority with a strong oversight from regulators and interested parties.”
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