N.Y. Insurers Call Assessments Unfair

NU Online News Service, Dec. 2, 4:01 p.m. EST

Insurance industry trade groups, in advance of a hearing by the New York Assembly Standing Committee on Insurance, complained that assessments on carriers are unfair and being inappropriately allocated.

The organizations objected to the rise in "332 assessments" over the last year, not only because of the increase in dollar amounts but because they say the assessments are supposed to be used strictly for the operations of the New York State Insurance Department (NYSID).

Instead, according to a statement by Marc Craw, vice president of the New York Insurance Association (NYIA), the assessments have been used to fund other state agency programs through suballocations.

NYIA said, "The amount of the assessment, and particularly the percentage of NYSID's budget being suballocated for unrelated programs, have both been growing substantially during the past decade.

"In 2000-2001, NYSID's budget was roughly $100 million with approximately $14 million in suballocations, meaning NYSID's budget has quadrupled and the amount of suballocations has increased by more than 22 times."

In this past year alone, NYIA said, the assessments on domestic insurers nearly doubled and the amount of NYSID's budget earmarked for suballocations nearly tripled.

Mr. Craw said there are no proposed numbers for 2010 assessments since the 2010-2011 executive budget has not been released yet. But he said Assembly Insurance Committee Chairman Joe Morelle indicated he has been uncomfortable with the steep rise in the insurance department budget, and in particular with the suballocations to other state agencies, and his concerns led to the hearing set for tomorrow.

Paul Magaril of the Property Casualty Insurers Association of America (PCI) said all committees are supposed to hold budget hearings at some point during the year. He explained that sometimes they hold the meetings, and sometimes not, but because of the increases in 332 assessments, the Assembly Insurance Committee made sure it held a hearing this year to hear from interested parties.

As far as what authority the committee would have to act on the information obtained in the hearing, both Mr. Craw and Mr. Magaril said the committee could find that the assessments are an issue for insurers and bring that to the attention of the full Assembly during budget negotiations.

According to NYIA, "The 2009-2010 state budget includes nearly $455 million in assessments on insurers with $317 million in suballocations, which equates to suballocations constituting almost 70 percent of the assessments, with a meager 30 percent being used for the intended purpose of funding the operations of NYSID."