NAIC Approves 2000 Budget
Members of the National Association of Insurance Commissioners (NAIC) approved the association's budget for 2000 during the Plenary Session of the association's Winter National Meeting.
"The proposed budget for the year 2000 continues the policy of providing a prudent, sound, responsible budget that is supportive of the members' needs," NAIC President and Connecticut Insurance Commissioner George Reider, Jr., said. "The 2000 proposed budget will allow the association and its members to move forward with our current operations and begin a select number of new initiatives without requiring new funding sources. Reider said the proposed budget calls for projected revenue of $46.3 million, a 4.32 percent increase.
Proposed spending in the 2000 budget is $45.6 million, a 7.20 percent increase next year over current spending. However, much of the increases are tied to the reorganization of the association's Securities Valuation Office (SVO) in New York. "Revenue increases would be only 0.8 percent and the increase in expenses would be a modest 1.67 percent without the SVO reorganization," Reider said.
"This budget represents hundreds of hours of work by Cathy Weatherford, the executive vice president of the NAIC, and her staff. I commend them for all their hard work. This budget is a very strong document for the NAIC to use as a fiscal blueprint for beginning the next century," Reider said.
Significant revenue changes from 1999 to 2000 are:
Database fees are budgeted to decrease approximately $78,450 due to an increase in companies filing under the group fee cap of $150,000.
Publications and subscriptions are budgeted to decrease $430,094 due to the elimination of filing requirements for securities that are rated by other nationally recognized securities rating organizations. In addition, the reorganization and estimates of the date publications will be available for sale will result in decreased sales of hard copy publications.
Services are budgeted to increase by $2.1 million due to the implementation of the new filing fee structure under the SVO reorganization.
Education Program revenue is budgeted to increase by $308,475 with five new educational programs being offered in 2000. Additional sessions will be added for some existing programs, as well.
Significant expense changes from 1999 to 2000 are:
Salaries and related employee benefits are budgeted to increase $2.2 million and $218,753 respectively. These increases include an average annual increase of 4 percent on base salaries and other adjustments. Those adjustments include the SVO reorganization, the final component of the 1997 wage and compensation study, Publications Department reorganization, and bi-annual adjustments to salary ranges. With the strong economy, the job market is very competitive, and the NAIC adjusted previous salary levels to attract and retain qualified employees.
Professional services budgets have decreased $1.01 million, due to the conclusion of Year 2000 testing activities.
Computer services will increase $410,843 primarily due to the SVO reorganization.
Examiner Team Expenses are budgeted to decrease by $76,900 because of the redesign of the examiner team software system and procedures.
Education Programs are slated to increase $247,531 because of the addition of 5 new educational programs and the increase in existing program offerings.
Occupancy will increase by $513,629 related to the move to a new facility in 2000.
The proposed change in the corporate structure of the NAIC has been discussed during the public budget meetings. The structure change includes language for a new Certificate of Incorporation and Bylaws of the NAIC and an amendment to the existing NAIC Constitution, which adds a new Article XII, relating to reorganization.
"Ninety-five percent of all associations today are incorporated, and the size and sophistication of the NAIC's activities make this desirable for the future," said Reider.
The change in tax status is recommended because, overall, the 501(c)(3) charitable, educational organization is a better fit for the activities of the NAIC. Advantages include the fact that the public generally has a better understanding of the nature of a 501(c)(3) organization, and that status would permit the NAIC to expand educational activities in the future.
"The 501(c)(3) tax status is a better fit for us as an organization. We anticipate no significant changes in the officer structure or in the committee structure as a result of this reorganization. We have been careful to preserve the existing NAIC committee structure, officers, and zones, so that this change really will not affect our members, the industry they regulate, or the consumers they protect," Reider said.