The New York Insurance Association said it is opposing a provision in Governor David Paterson's preliminary deficit reduction package that would add $140 million in assessments for New York domestic insurers.
Ellen Melchionni, president of NYIA, said the assessment would be added to the $340 million in assessments insurers already pay to fund New York State Insurance Department (NYSID) expenses.
Included in the $340 million is $111 million in "suballocations" that Ms. Melchionni said fund non-insurance department programs. The $140 million additional assessment would be added to these suballocations.
The suballocations are supposed to fund matters associated with insurance, but Ms. Melchionni said it has "gotten tricky," and in a statement she called the proposal a "back-door tax" on insurers and their policyholders.
Ms. Melchionni told NU Online the proposal includes language that makes the state "bulletproof" from litigation, giving the state immunity against insurers that would raise legal challenges questioning how the money is used.
In the NYIA statement, she said, "The funding of programs which are supposed to benefit all New Yorkers should be funded by all New Yorkers and not be hidden away in the budget of a state agency which has no direct responsibility for managing them, nor funded entirely by a single industry which does not wholly benefit from them."
The NYSID did not comment beyond pointing out that the governor's budget is not due out until Tuesday.
The governor's office referred NU Online to the state's Budget Office, which did not return a phone call.
Ms. Melchionni acknowledged the budget has not yet been released but said the increase is in Gov. Paterson's deficit plan, and she believes the state is seriously considering the assessment increase.
She noted that former Assembly Insurance Committee Chairman Alexander "Pete" Grannis, D-New York, held hearings in 2005 about "outrageous suballocations."
She added that she and others will be meeting with the Budget Office today to discuss the assessment increase proposal.
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