Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Life Health > Life Insurance

NAIC budget at $93.2 million for 2014, up 3.68%

By Elizabeth D. Festa

X
Your article was successfully shared with the contacts you provided.

The new budget is in. The National Association of Insurance Commissioners (NAIC) 2014 proposed budget includes total revenues of $93.2 million, including $3.8 million in investment income and total expenses of $91.8 million, which represents a 3.68 percent and 3.87 percent increase, respectively, from the 2013 budget. 

It is expected to exceed the 2013 budget by $7.3 million.

The proposed operating revenue  budget is expected to be $89.5 million, 2 percent higher than the 2013 budget but 1.5 percent less than the 2013 projection.

However, in relation to the 2013 projected totals, the 2014 proposal represents an operating revenue decrease of 1.51 percent and an operating expense increase of 2.67 percent.

Increases are coming not from database fees but valuation services. The valuation services revenue is higher than budget by $2.52 million mostly because of higher than budgeted revenue generated by the 2012/2013 structured securities project and higher than expected Securities Valuation Office (SVO) revenue, the NAIC said in its proposed budget release. 

Database fees are about 29.5 percent of the 2014 budget revenue mix, while valuation services are about 26 percent. Professional services is lower than the previous year due to resolution of legal matters and completion of enhancements to SERFF required for the Patient Protection and Affordable Care Act (PPACA) Plan Management System.

Database fees are lower than budget by $410,000 due to database fee caps.

Revenue from publication and insurance data products is up by $181,499 from the 2013 budget and $133,000 more than the 2013 projection due to growth in this area. 

“The 2014 proposed budget reflects the NAIC’s commitment to prudently manage expenses while investing in important projects to enhance the association’s ability to evolve with changes in insurance regulation,” stated Adam Hamm, NAIC president-elect and North Dakota Insurance Commissioner. “The NAIC provides its members with the tools and resources necessary to regulate companies in a sound and cost-effective manner.”

Proposed expenses increased almost 4 percent compared to 2013 and increased a lower amount compared with the 2013 project, the NAIC said.

Salaries, taxes and benefits comprise the largest share of the 2014 budget at almost 60 percent of total operating expense.

Travel expenses are expected to be 5.5 percent of the budget expense in 2014, a number that has been gradually ticking up as the role of international supervisory issues has become more high-profile and embedded in regulatory work. 

The NAIC says the travel expenses are the same as the 2013 budget but 6.6 percent higher than the 2013 projection.

The proposed operating revenue  budget is expected to be $89.5 million, 2 percent higher than the 2013 budget but 1.5 percent less than the 2013 projection. 

NAIC going after strategic  hires, consultants

Total NAIC employees number 465, the largest function area being insurance data products with 101.5 employees, followed by financial regulatory services and information systems. 

Staff headcount additions proposed for 2014 include the addition of two actuaries to support the implementation of principles-based reserving, an enterprise risk management expert for the NAIC’s Own Risk and Solvency Assessment (ORSA) program and an attorney to support the review of foreign jurisdiction materials for collateral reduction.

In addition, the NAIC is beginning an outreach project involving the use of outside consultants starting now, in the fourth quarter of 2013, and will conclude in late 2014 at a cost of $500,000. The consultants are being hired to “educate domestic and international policymakers about the actual workings of the state-based regulatory system in the United States by helping the association in developing and implementing an educational outreach program, both domestically and internationally.

A public hearing will be scheduled in late November. Once the conference call date/time has been finalized by the end of October, the details will be posted on the NAIC website. The yearly rite of passage of providing comments on the proposed budget has a deadline of Nov. 15, 2013.

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.