The NAIC's annual budget process is an open and deliberative process among the NAIC members and members of the insurance industry. NAIC budgets have historically offered a high level of disclosure for a nonprofit budget. Throughout the development of the NAIC's budget, there are numerous and detailed reviews by all levels of management, the NAIC Officers, the NAIC Executive (EX) Committee, and the Internal Administration (EX1) Subcommittee. As stated in Article IV of the NAIC Bylaws, the budget is released to the public for comment before final consideration and adoption.
The National Association of Insurance Commissioners (NAIC) 2020 budget was approved on Dec. 10, 2019, following months of development by NAIC officers, the NAIC Internal Administration (EX1) Subcommittee, the NAIC Executive (EX) Committee and input from NAIC staff.
"The 2020 budget reflects the commitment of our membership to enhancing the services and operations our members rely on, as articulated in the State Ahead strategic plan," said Raymond G. Farmer, NAIC President-Elect and South Carolina Director of Insurance. "The pace of change in technology in the insurance sector requires enhanced tools, and our budget takes these needs into account."
The NAIC's 2020 budget includes total revenues (including investment income) of $117.6 million and total expenses of $124.8 million, which represents a 6.5 percent increase and 5.4 percent increase, respectively, from the 2019 budget.
The 2020 budget includes five Fiscal Impact Statements (fiscals):
Cloud Transition Phase IV (Cloud Migration) – The fourth phase of the NAIC's move to the Cloud, this fiscal requests funding for 2020 migrations. The strategy focuses on minimal change to targeted systems, to enable them to move to the Cloud quickly and minimize costs. The move to the Cloud will transform NAIC into a nimbler organization, allowing for more frequent and faster delivery of functionality and products. It also continues the implementation of SOC 2 capabilities for secure cloud computing and provides technical support for in-progress cloud projects.
Enhanced Regulatory Data Collection (RDC) – This project expands the current framework into an enterprise solution that can integrate with other applications, improve the quality of the data collected, and minimize delays between reviewers and submitters. It will also add an administration portal to allow business owners to enter and maintain form definitions, data collection file formats, validation rules, and notifications. The UCAA redesign project listed below will utilize the enhanced functionality.
Financial Data Delivery Platform Enhancement – This project moves financial statement data fulfillment to a cloud-based platform, thus allowing the NAIC to sunset two systems on outdated platforms and enhance security. The move will also improve delivery of datasets to licensees by utilizing web services. This will benefit customers and NAIC support staff as the redesigned processes will be easier to use and require less manual intervention and support than current processes.
SERFF Billing Improvements – This project will eliminate the significant manual effort currently employed by customers and the NAIC to administer and pay/collect SERFF transaction fees. A fiscal was approved in 2018 to address the NAIC's financial liability by reducing the number of prepaid block tiers and expiring blocks after 24 months. With this proposal, customers will no longer purchase prepaid blocks, thereby eliminating the financial liability altogether. Instead, customers will receive a discounted transaction fee based on filing volume in the previous year. This project will also collect transaction fees along with applicable state fees at the time of filing, eliminating manual effort on customers' part to log into a separate platform to pay invoices and the manual effort on the NAIC's part to invoice and collect fees.
Uniform Certificate of Authority Application (UCAA) Redesign and Biographical Affidavit Database – This 24-month project redesigns the UCAA system as a cloud-native solution and expands the number of company licensing-related applications which can be submitted electronically to the states thereby eliminating manual processes and improving accuracy and completeness. The final phase includes a biographical affidavit database. The redesigned platform will use the enhanced RDC process, which will allow this project to expedite the implementation of additional forms for data collection and electronic submission to the states.
The approved 2020 budget also includes $324,500 in funding to conduct an assessment of the SERFF platform by a third-party vendor, which was approved with the 2020 budget by the entire membership on Dec. 10, 2019. The addition of these funds is shown in the Reconciliation of Changes to 2020 Budget document.
Should you have any questions about the NAIC budget, please feel free to contact Jim Woody, Chief Financial Officer at (816) 783-8015 or Carol Thompson, Senior Controller at (816) 783-8038.
NAIC 2019 Budget
The NAIC adopted its 2019 Budget during the Joint Meeting of the Executive and Plenary Committees at the 2018 Fall National Meeting. The budget includes total revenues of $110.4 million and total expenses of $118.4 million.
Periodically the Executive (EX) Committee and the Internal Administration (EX1) Subcommittee receive funding requests for projects after the annual budget is approved. Generally, these projects are of an urgent nature to the NAIC's annual agenda or its committee structure that were either not known or not solidified at the time the annual budget was prepared. Their impact is fully described as part of the 2019 projections included within the 2020 budget proposal.
NAIC 2020 Budget
The 2020 budget is over 130 pages and is set-up for duplex printing.
Media queries should be directed to the NAIC Communications Division at 816-783-8909 or email@example.com.