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.