NAIC Approves $79 Million 2012 Budget

The National Association of Insurance Commissioners approved its budget for the coming year in a conference call vote Dec. 20. The $79.2 million budget passed despite complaints from industry trade organizations that the NAIC is spending too much money on travel, salaries and other expenses.

The budget includes anticipated revenues of $79.2 million and expenses of $77.6 million. Those figures mark a 4.99% and 2.52% increase, respectively, from the 2011 budget.

The largest increase in expenses comes as a result of salaries, employee compensation and taxes, according to the NAIC's written summary of the budget. In 2012, the NAIC expects to spend $38.3 million on salaries, roughly $1.5 million more than it budgeted in 2011 (Best's News Service, Oct. 31, 2011). The NAIC has said the additional funds for salaries are the result of an increase in the salary budget rather than salary increases, and the increase in the salary budget comes as a result of several national salary surveys.

The NAIC is also allocating additional funding for 14 new initiatives, including several stemming from the NAIC's effort to aid states in implementing the Patient Protection and Affordable Care Act. Among those programs are expanding its System for Electronic Rate and Form Filing, a system to help states collect data and establish their individual health insurance exchanges.

On the industry side, the size of the NAIC's operating reserve was added to the list of perennial complaints, which includes the amount spent on commissioner travel -- a frequent target of industry groups.

Wayne Mehlman, senior counsel for insurance regulation at the American Council of Life Insurers, said earlier this month the surplus of $72.6 million, a 50% increase during the past three years, was far too much (Best's News Service, Dec. 7, 2011).

(By Jeff Jeffrey, Washington Correspondent: jeff.jeffrey@ambest.com)