The National Association of Insurance Commissioners is hoping to increase revenue by 4.9% in 2008 while increasing expenses just 2.2%.
The NAIC, Kansas City, Mo., has released a 142-page budget that calls for the group to spend $66.4 million and take in about $68.2 million.
The NAIC held a hearing on the budget on Nov. 6, and the NAIC’s Internal Administration Subcommittee voted to advance the budget.
The full NAIC membership is set to vote on the proposal at the organization’s winter meeting in December.
Several insurance trade groups have submitted comments on the NAIC’s budget proposal.
The American Council of Life Insurers, Washington, expressed concern about both the overall expansion of the budget and the anticipated surplus.
“Annual revenues and expenses do not need to be on an automatic upward glidepath,” ACLI officials write in that group’s comment letter.
The NAIC has a projected $55.4 million accumulated surplus, and, as a 501(c)(3) organization, there is no need for NAIC revenues to exceed expenses, ACLI officials write.
The NAIC should hold down database filing fees, Securities Valuation Office fees and National Insurance Producer Registry fees, ACLI officials write.
Another trade group, the American Insurance Association, Washington, says it supports the NAIC’s plan to add a staff person to handle matters involving the International Association of Insurance Supervisors, Basel, Switzerland, but would prefer to see the NAIC hold just 3 national meetings per year, rather than 4.
The National Association of Mutual Insurance Companies, Indianapolis, says the NAIC’s current 80% reserve is “beyond prudential and a cushion that invites expenditure without deliberation.”
NAMIC is also expressing concern about the NAIC’s interest in international activities.
There is a question about whether solvency requirements for primary insurers must be global and whether the proposed shift to principles-based regulation will merely add another layer of regulation to the mix, NAMIC officials write.
NAIC officials write in their own response that they believe the NAIC is maintaining its reserves at a prudent level and disagree with the assertion that the reserve level could be manipulated.
In addition, the NAIC says it understands the importance of cost containment and such awareness has helped the organization keep increases in operating expenses moderate.
In response to criticism of international involvement, the NAIC officials write that failure to stay involved could increase costs for U.S. insurers that operate abroad.
If U.S. regulators fail to participate in international discussions, “markets where U.S. companies are active will not be influenced by the regulatory practices that have been developed and fine-tuned over years of experience in the U.S.,” NAIC officials write.