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Regulation and Compliance > State Regulation

State Insurance Department Budgets Slip for Fiscal Year 2013: NAIC

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At a time when there is increased public, Congressional, federal and international attention and involvement in insurance regulation on federal healthcare reform implementation and sweeping financial stability reforms, state insurance department budgets for fiscal year 2013 are expected to fall by 3.2% from 2012 amounts, and to decrease by 2.2% since 2009 aggregate levels.

Fiscal 2013 sees a total of $1.250 billion, down from $1.292 billion in 2012 and $1.279 billion in 2011 in state insurance department budgets overall.

The last time the annual insurance department budget growth rate rose occurred in 2010-2011. Budgets have never fully recuperated from the double digit growth prior to the market crash in 2007-2008, when the growth rate plunged to negative 10.1% from 15.6% growth a year earlier.

That’s according to charts and date from a newly released report by the NAIC entitled 2011 Insurance Department Resources Report, Volume 1. The first volume of the 25th edition of the Insurance Department Resources Report (IDRR) is designed to help state insurance departments assess their resources in comparison to other states. 

Aggregate insurance department budgets in 2013, though, are expected to be at about 2008 levels, the report charts.

Overall, insurance department fulltime equivalent staffing levels increased slightly from 2010, although more departments cut staff (25) than increased it, (20) according to the report. 

California reported the largest 2013 budget, a total $168.239 million, which is slightly up from 2012, and $24.6 million greater than the second-largest 2013 budget, New York’s, with $143.593 million, which is flat from 2012, according to the NAIC report. Texas is also in the top tier of 2013 budgets with $105.853 million, down from almost $153 million in 2012, the report shows. Alaska’s budget is $7.538 million but pays staff a higher salary in many positions than other states, the report reveals.

States with the highest dips in budgets by percentage include Delaware, Florida, Arizona, Indiana and Pennsylvania.

The NAIC explains “after several years of double-digit growth rates in the latter half of the 1980s, the growth in insurance department budgets slowed considerably in the 1990s. In the late 1980s and early 1990s, the push for accreditation and computerization necessitated increased insurance department funding.”

“But, as more states became accredited, and with the push for fiscal conservatism in many states, the amounts appropriated for the regulation of insurance have leveled off in recent years,” the NAIC continued.

Of course, not all revenue generated through the auspices of the state insurance departments are retained by the insurance departments, the report notes. In most cases, the NAIC said, these revenues are deposited into a state’s general revenue fund, although in some states the department’s budget is linked to the amount of revenues collected.

The report reveals which states pay the highest for various supervisory positions, which have the most personnel in areas like market conduct, and where most money is spent. Alaska, Texas, Wisconsin, Georgia and Washington, D.C., generally pay high salaries, according to the charts provided, while New York, Illinois and California beef up their departments with examiners and consumer-oriented staff.

Overall, the highest percentage population of insurance department staff is in financial regulation, comprising 17.6% of the department staff pie overall in 2011, according to the NAIC chart.

California has the highest number of supervisory (administrative, not direct supervision of insurers) staff by far, at 23, apparently followed by Louisiana, with 11, while most states have four or fewer, according to the data charted.

But if one is interested in examining companies, look to New York. The home to MetLife and New York Life Insurance Co., is the state with the most financial examiners at 203, dwarfing runner-up Illinois, with 51, and California with 37.

California has the most complaint investigators, with 63, followed by New York, with 62, Florida with 53.

New York also leads with market conduct examiners (114), followed by California and Missouri.

Florida (44) and California (43) and Texas (41) lead with producer licensing positions.

Georgia, followed by two of the biggest states also pay their deputies the highest salaries. Georgia tops all with a high of $255,000 for a deputy position, followed by Texas and Alaska are closing in on $200,00 salaries. Those in the $150,000-plus ranges include New York, Tennessee and Washington, D.C.

Alaska, Wisconsin, Texas and New Jersey all pay their financial examiners more than other states do.

Consumer Affairs /complaint investigators position salary ranges were not as high as many other positions in insurance departments across the country although the complaint investigator top salary does surpass $100,000 in Alaska, New York and Wisconsin.

Likewise, producer licensing positions are not as highly paid, and remain under $100,00 as a high, (excluding supervisory staff), but are led by Alaska, with Texas, D.C. and New York among the highest.

Actuaries can make over $200,000 in Florida and Alaska, but you are a systems/Lan or computer programmer, Wisconsin’s insurance department is the place for you, with a high top salary of $123,250, followed by Washington D.C. with a $118,598 salary.

More interesting statistics from the report on the state of play in 2011 include the fact that the number of U.S. domestic insurers decreased from 7,863 to 6,296 companies since 2010 but this is due to is attributable to captive insurers no longer being reported under domestic insurers.

*The total number of company examinations completed was 2,375.

*There were 316 liquidations in progress at year-end, as well as 41 rehabilitations in progress.

*Licensed resident producers numbered 2 million individuals and 204,981 entities. Non-resident producers consisted of 4.2 million individuals and 317,940 entities.

*By far, Florida had the highest number overall of individual licensed producers, resident and non-resident, in 2011, according to a state-by-state chart prepared by the NAIC.

* 4,521 fines and 278 restitutions were levied against insurance producers, 23,845 licenses were suspended, and 1,708 licenses were revoked.

* State insurance departments received more than 283,000 official complaints and 2.1 million inquiries. Forty states had separate criminal fraud investigation units, and 53 jurisdictions had company and producer licensing information available online.

A hard copy of the first volume of the 2011 Insurance Department Resources Report – Volume One can be ordered from the NAIC Store


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