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

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

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

The industry had some concerns about the powers given to the agency 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 that isn't already clearly regulated by another New York agency.

According to the bill there will still be separate banking and insurance divisions, with one superintendent but separate deputy superintendents and appropriations. Efficiency will be improved through "back office and support consolidation."

Gary Henning, northwest region vice president with the American Insurance Association, says AIA "strongly advocated" for a separate insurance division.

PCI will be "closely monitoring the transition process," said Baldwin. It is not anticipated that there will be any significant reduction in staff from the merger.

By June 13, Gov. Andrew Cuomo is to create a working group—with representatives of the banking, insurance, and financial services industries—"to examine ways to improve the efficiency and effectiveness of banking regulation and insurance regulation, including opportunities to integrate certain regulatory activities prescribed by the banking law and the insurance law. The report is due in January.

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

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

Special Reports /

Budget Approval Cements N.Y. Banking, Insurance Merger

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