NU Online News Service, March  31, 3:09 p.m.EST

New York has officially adopted its $132.5 billion budget, whichgives the rubber stamp on a proposal to merge the state's bankingand insurance departments.

Language within bills that passed overwhelmingly by bothchambers just after midnight on March 31 satisfied the insuranceindustry, says Kristina Baldwin, assistant vice president for theProperty Casualty Insurers Association of America (PCI).

The industry had some concerns about the powers given to theagency but "they were modified, and are no longer major concerns,"Baldwin said. 

The new agency will be known as the Dept. of Financial Services,which will oversee any financial product, service or entity thatisn't already clearly regulated by another New York agency.

According to the bill there will still be separate banking andinsurance divisions, with one superintendent but separate deputysuperintendents and appropriations. Efficiency will be improvedthrough "back office and support consolidation."

Gary Henning, northwest region vice president withthe American Insurance Association, says AIA "stronglyadvocated" for a separate insurance division.

PCI will be "closely monitoring the transition process," saidBaldwin. It is not anticipated that there will be any significantreduction in staff from the merger.

By June 13, Gov. Andrew Cuomo is to create a working group—withrepresentatives of the banking, insurance, and financial servicesindustries—"to examine ways to improve the efficiency andeffectiveness of banking regulation and insurance regulation,including opportunities to integrate certain regulatory activitiesprescribed by the banking law and the insurance law. The report isdue in January.

"AIA looks forward to being an integral part of this importantdiscussion on streamlining regulation and strengthening theproperty and casualty marketplace in New York," says Henning.

The Dept. of Financial Services is slated to open on Oct. 3.