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Retirement Planning > Social Security

NAIC Waives SVO Filing Assessment

By Jim Connolly

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The National Association of Insurance Commissioners, Kansas City, Mo., has waived a $790,000 second installment in a 2004 industry fee assessment for the organizations Securities Valuation Office.

The installment was part of a $1.58 million 2004 assessment put in place to ensure that filing changes at the SVO, based in New York, are revenue neutral. In 2004, regulators agreed to make certain Nationally Recognized Statistical Rating Organization-equivalent securities exempt from SVO filing.

But 4,097 exempt securities filed by companies in 2004 resulted in less of a shortfall and consequently less need for an assessment to maintain revenue neutrality, according to Catherine Weatherford, NAIC executive vice president and CEO.

Weatherford says the NAIC will try to educate companies to understand that those filings, NAIC-1 and NAIC-2 securities, do not have to be filed. Some companies may have chosen voluntarily to file in 2004 as they transition into the new system, she says, but many already have stopped filing those exempt securities. Indeed, the NAIC says that the number of those filings have declined to 4,097 filings from 24,790 securities in 2003.

The NAIC is in the process of reviewing whether other securities may be exempt and a pilot project could be established, Weatherford says.

As companies reduce their filings of these securities, an assessment could be made in subsequent years to ensure neutrality, she explains, but NAIC will be proactive in monitoring revenue on a monthly basis in order to determine if an assessment is needed. The non-NRSRO filing fee revenue anticipated and budgeted for 2004 totaled $4.5 million.

These non-NRSRO filings that are not exempt fell short of 2004 revenue projections by 9.4% or $387,850. However, the filing of exempt securities and filing of non-exempt securities late in 2003 that were completed in 2004 brought the shortfall to $61,000, which will be waived, NAIC says.

“We are pleased that the NAIC is meeting its commitment to keep revenue neutral,” says Whit Cornman, an American Council of Life Insurers spokesperson. “It is a positive first step in revamping the SVO process.”

Reproduced from National Underwriter Edition, February 18, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.

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