When insurers file New York financial statements, they must exclude the effects of capital and surplus exceptions granted in other states.

The New York State Insurance Department has announced that requirement in Circular Letter Number 4, which was issued Thursday.

Insurers’ annual financial statements are due March 1.

Some states are responding to insurers’ requests for helping by permitting insurers to use accounting practices not normally allowed by the current statutory accounting rules.

To help consumers compare insurers, insurers’ financial reports “must be clear and consistent,” New York Insurance Superintendent Eric Dinallo says in a statement.

“Foreign insurers” – insurers that operate in New York state but have domiciles in other states – must adjust their statements to reflect New York accounting practices, New York regulators say.

An insurer that is using permitted practices outside New York should reflect those practices in the New York annual statement supplement, by adjusting the insurer’s assets, liabilities and surplus on a New York basis, officials write in the circular statement.

The Consumer Federation of America, Washington, and the Center for Economic Justice, Austin, Texas, have put out a press release praising New York for requiring insurers that operate in New York to report on their use of permitted practices in other states.

The New York requirement will help consumers “see through a maze of accounting changes and make better decisions on purchase and maintenance of life and annuity policies,” says CFA Insurance Director Robert Hunter.

A consumer doing business with insurers that do not file financial statements in New York should ask home state insurance regulators whether the insurers have used permitted practices to increase reported capital levels, according to the CFA and the CEJ.

If the answer is “yes,” the consumer should ask how the changes have affected the insurers’ balance sheets, the groups say.

The CFA and the CEJ note that some states are letting insurers count more “deferred tax assets,” or expected future tax credits, as part of their required capital, “even though these deferred tax assets do not represent real money available to pay claims and benefits.”

A copy of the New York circular letter is available here.