Insurance companies will get a $790,000 break on the annual fee the National Association of Insurance Commissioners levied on carriers who exercised their right to avoid an NAIC rating of their stock portfolios.
The $790,000 represents half of the 2005 $1.58 million fee assessed to insurance companies under the terms of a 2003 agreement. Under that arrangement insurers could exempt securities rated by a nationally recognized standard rating organization from review by the NAIC Securities Valuation Office.
The annual assessment was intended to ensure that the new exemption did not result in any loss of revenue to the NAIC.
Industry representatives had long complained of the effort entailed in the essentially redundant approval process of those securities already approved by groups such as Moody's and Standard and Poor's, and therefore did not object to the extra assessment imposed to secure the exemption.
Bill Boyd, financial regulation manager for the National Association of Mutual Insurance Companies, expressed satisfaction with the second annual waiving of half of the assessment, noting how well the agreement was working out.
Catherine Weatherford, NAIC chief executive officer, said that while educational efforts are underway to ensure companies know of the exemptions, some filings still came in last year.
"However, much of the year's results reflect the SVO's efficient completion of carryover and current-year securities filings," she said. "With little carryover in the current year, we anticipate a leveling in the assessment for 2006."
According to the NAIC, the agreement reached between industry and representatives called for the NAIC to adjust the 2005 assessment as a result of variances between the actual non-NRSRO rated filing volumes and the volumes projected as part of the September, 2003 agreement.
The non-NRSRO filing fee for revenue anticipated and budgeted for 2005 totaled $4.3 million.
NAIC President Alessandro Iuppa said the assessment reductions speak well of the continued efficiencies gained at the SVO during the past year. "These efficiencies speak to how effective state regulation continues to be," he said.
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