The National Association of Insurance Commissioners' (NAIC's) annual budget process is an open and deliberative process among the NAIC members and members of the insurance industry. NAIC budgets have historically offered a high level of disclosure for a nonprofit budget. Throughout the development of the NAIC's budget, there are numerous and detailed reviews by all levels of management, the NAIC Officers, the Internal Administration (EX1) Subcommittee, and the NAIC Executive (EX) Committee. As stated in Article IV of the NAIC Bylaws, the budget is released to the public for comment before final consideration and adoption.
NAIC 2013 Budget
Members of the NAIC adopted its 2013 operating budget on December 2, 2012, following months of development by NAIC leadership, the Internal Administration (EX1) Subcommittee, Executive (EX) Committee, and executive staff.
This budget reflects our inherent strength and transparency as an organization. The 2013 budget supports important initiatives that will allow regulators to better protect insurance consumers and ensure a solvent industry. The allocation of NAIC financial resources continues to be guided by our astute investment in these principles to support the state-based system of regulation.
Jim Donelon, NAIC President-Elect, and Louisiana Insurance Commissioner.
The NAIC 2013 budget including fiscals, but before the modeling of structured securities includes total revenues of $82.3 million and total expenses of $81.2 million, which represent a 3.51% and 3.79% increase, respectively, from the 2012 budget.
There are seven Business and Fiscal Impact Statements (fiscals) in the 2013 budget:
Health Insurance Exchange Plan Management Data Collection and Communication through SERFF. This is Phase II of a multi-year project to assist states in the establishment of health insurance exchanges, specifically in the area of plan management.
State Based Systems (SBS) Software Enhancement and Technology Compliance Initiative. This is Phase I of a project to begin the migration of SBS services by updating the SBS architecture and tool set.
Financial Staff Exchange Program. This initiative will allow experienced regulators from one state to work with financial regulators from another state for a limited period of time to enhance the solvency expertise of the receiving state.
Actuarial Guidelines XXXVIII (AG 38)/Principle-Based Reserving (PBR) Implementation and Monitoring. This fiscal supports the implementation and monitoring of activities required by both AG 38 and PBR initiatives.
OPTins Clearinghouse. This project includes the development and implementation of functionality within OPTins to allow Non-Admitted Insurance Multi-State Agreement (NIMA) states to have a choice in clearinghouse software.
Natural Catastrophe Stress Test. This initiative would conduct a financial stress test involving a natural catastrophic event to determine the financial impact on an insurer and its reinsurers as well as on the insurance sector as a whole.
In-House Structured Securities Group. This proposal establishes an in-house structured securities group to support the current modeling of structured securities and will allow the NAIC to expand its analysis to more complex structured securities products.
Click HERE to view the NAIC's 2013 budget.
*Please note the 2013 budget includes 269 pages and is set up for duplex printing.
Periodically the Executive (EX) Committee and the Internal Administration (EX1) Subcommittee receive funding requests for projects after the annual budget is approved. Generally these projects are of an urgent nature to the NAIC’s annual agenda or its committee structure that were either not known or not solidified at the time the annual budget was prepared. Currently, there are no such funding requests for 2013.
Should you have any questions about the NAIC budget, please feel free to contact Jim Woody, Chief Financial Officer at (816)783-8015 or Carol Hartley, Senior Controller at (816)783-8038.