INDIANAPOLIS (Nov. 4, 2005)—The National Association of Mutual Insurance Companies (NAMIC) questioned on Thursday the procedures used to tentatively approve funds intended for an insurance producer “fingerprint repository,” asking whether the project should be administered by the National Association of Insurance Commissioners (NAIC).
Made during the NAIC’s public budget hearing, NAMIC’s objection also targeted the one-day notice of the tentative approval of about $54 thousand. That project and two others, contrary to normal NAIC budget practice, were introduced only Wednesday after their approval in executive session of the NAIC’s Internal Administration Subcommittee that day.
NAIC President-Elect and Maine Superintendent of Insurance Al Iuppa, who conducted the telephonic budget hearing, appeared surprised at industry’s concern about the budget item, which he suggested was “only a small amount” in the larger scope of the NAIC’s $59.3 million proposed 2006 budget.
NAMIC and other insurance industry trade associations had earlier in the day joined in a letter to NAIC President Diane Koken on lack of industry input into who would run the repository—the NAIC or the National Insurance Producer Registry—and why the project debuted more than a month after the full budget document was exposed.
In other NAMIC testimony, William Boyd, NAMIC’s financial regulation manager, noted that, although the NAIC increase in revenues appeared to be only 1.6 percent, the increase in expenses budgeted for 2006 over expected 2005 expenses of 3.8 percent, “presage significant need for additional revenue in succeeding years. Caution needs to be exercised now against still more material expense growth in later years and the revenue requirement that can be expected to accompany it.”
Boyd praised, however, the NAIC’s reduction in its dependence, evident in both 2005 and the 2006 budget, on database fees assessed to insurers. NAMIC’s members consistently object to the database fees, which continue to be the largest element of NAIC revenue.
With that of other industry representatives NAMIC’s testimony told the NAIC that it had enough reserves and should cease accumulating reserves at the end of 2006. NAMIC has asserted that the NAIC has diverse and stable sources of revenue and needs little reserve.
An additional focus of NAMIC testimony was a proposal to add two analysts to the Security Valuation Office (SVO) to produce a “pre-examination analytical product.” Since a state examiner already determines whether an insurer’s investment portfolio conforms to the state’s investment statute or comports with the company’s investment plan, or both, “the proposal seems most of all to intend enhancement of the SVO’s mission and revenue for minimal gain in the solvency regime,” wrote Boyd.
“How many insurers fail for reason of bad investments?” asked Boyd.
NAMIC also questioned a more than quarter million dollar increase in travel expenses. “This appears to represent still more migration of expense for state regulators from their individual state budgets to the more malleable NAIC budget,” wrote Boyd. “We see also $50,000 allocated to Congressional delegations traveling to catastrophe sites. Does Congress not have enough money for this? Is this appropriately an NAIC obligation?”
The full text of NAMIC comments can be read at NAMIC Online.
For further information, contact
Rick Nelson, APR
(317) 875-5250 Tel
(317) 879-8408 Fax
Posted: Friday, November 04, 2005 12:00:00 AM. Modified: Friday, November 04, 2005 4:53:00 PM.
317.875.5250 - Indianapolis | 202.628.1558 - Washington, D.C.