An insurer trade group today assailed the New York legislaturefor approving an increased assessment on carriers domiciled in thestate that totals $40 million--or what the group says amounts to a20 percent hike.

"They call it an assessment, but it's really a backdoor tax,"according to Ellen Melchionni, president of the New York InsuranceAssociation.

She said the assessments--based on premium, and ostensibly usedto fund the State Insurance Department--totaled $300 million lastyear, and come in addition to a 2 percent tax on premium that goesin the state's general fund.

The assessment increase was part of a budget allocation for theDepartment of Insurance, which was approved Friday by thelegislature.

Ms. Melchionni said one of her concerns with the assessmentmonies is that the Insurance Department sub-allocates a significantportion of its budget to fund other agency programs that are notinsurance-related.

She mentioned a $26 million sub-allocation to aid localities,for which she said there are no specifics on what projects orprograms will be covered.

Additional sub-allocations include:

o A transfer to the Department of Health of $21.5 million for aforge-proof pharmaceutical prescription program.

o $187 million for enhanced newborn screening programs.

o $5 million to a cervical cancer vaccine program.

o $10 million for a lead poisoning prevention program.

o $2 million to fund a childhood obesity program.

o $8 million for an immunization program.

Another $2 million, according to Ms. Melchionni, is allotted forfire safety standards for cigarettes--an expenditure shequestioned, noting that New York already requiresself-extinguishing cigarettes.

She also wondered why the Department of Law is due to receive $3million to investigate broker/insurer practices, when theinvestigations "have been closed."

The assessments, she said, are "making it an unattractive placeto base your company...Companies here are whacked extra hard."

Approval of the increase, she said, was a big surprise, becauseup at the state capitol in Albany, "they were talking about no NewYork taxes, and jump-starting our economy upstate. This is contraryto having that happen...They buried this in the budget."

Ms. Melchionni noted that many companies are "courted byneighboring states, and they tout tax advantages."

By contrast, "the governor and the legislature treat theinsurance industry as a pool of cash it can tap to fund programsthat only have a tangential connection to insurance," sheadded.

A call to the New York Insurance Department for a reaction toMs. Melchionni's complaints was referred to the state budgetoffice, which was not able to respond immediately.