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Read	E-mail Print

NAMIC Hopes for Retrenchment on NAIC Operating Reserve Growth

INDIANAPOLIS (Dec. 2, 2004)--The National Association of Mutual Insurance Companies (NAMIC) will focus attention on regulators' perceptions of their need to budget for "risk factors" during the National Association of Insurance Commissioners (NAIC) winter meeting in New Orleans, Saturday through Tuesday.

Although the NAIC has floated a proposed 2005 budget for revenue growth of only 1.9 percent over expected 2004 levels, that budget includes a large step toward a stated goal of pumping up the NAIC operating reserve to 100 percent of revenue by the end of 2006.

The revenue increase, combined with reduced expenses expected for 2005, would enable the NAIC to take the operating reserve to over 83 percent by the end of 2005.

In remarks accompanying its budget proposal the NAIC said "risk factors," including unfunded federal mandates and loss of publishing revenue required growth of the operating reserve. NAMIC told the NAIC in comment filed for the NAIC's Nov. 17 budget hearing that its existing operating reserve of over 60 percent was sufficient.

The NAIC's executive committee is expected to announce the final budget during the New Orleans meeting.

NAMIC Financial Regulation Manager William Boyd told the NAIC during the November budget hearing that most of the risk factors were not imminent and would not occur simultaneously and needed to be re-quantified for the 2005 budget.

NAIC President Diane Koken suggested reconsideration of the budget's risk factors would be made.

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For further information contact:
Robert Detlefsen at rdetlefsen@namic.org
or (317) 875-5250