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) 2023 budget was approved on Dec. 16, 2022, following months of development by NAIC officers, the NAIC Internal Administration (EX1) Subcommittee, the NAIC Executive (EX) Committee, and input from NAIC staff.
“The 2023 budget helps equip the NAIC to better support the nation’s chief insurance regulators tackle the many challenges facing consumers and the insurance industry,” said Chlora Lindley-Myers, NAIC President and Director of the Missouri Department of Insurance. “This budget recognizes the need for additional staffing resources, as well as a commitment to advance our technology and the modernization of insurance regulation in areas such as innovation, cybersecurity, and standard setting.”
The NAIC's 2023 budget includes total revenues (including investment income) of $146.8 million and total expenses of $149.2 million, which represents an 11.0 percent increase and 6.4 percent increase, respectively, from the 2022 budget.
The 2023 budget includes five Fiscal Impact Statements (fiscals):
- SERFF Modernization – 2023 Transition Stages – This project is in its second year of a three-year initiative to improve the SERFF platform. In 2023, users will move by product into the new platform, beginning with the Insurance Compact, followed by life and property/casualty. In 2024, health and plan management will complete the transition. This request includes the addition of two headcount to support transition stages and provide ongoing support. Funding for 2024 will be requested via a fiscal with the 2024 proposed budget.
- Financial Data Repository (FDR) Modernization Phase 1 – FDR supports the loading, processing, and maintenance of insurance company financial statement data. The more than 20-year-old platform has become increasingly difficult to support. This fiscal requests funding for a third-party assessment and consulting to develop new access paths to FDR data tables.
- Regulatory Information Retrieval System (RIRS) Coding Project – RIRS is a common, uniform system to enter and review regulatory actions against insurance producers, companies, and other related entities. This fiscal requests funds to make significant coding revisions to RIRS to identify and enhance system reporting and update a segment of the platform’s coding structure.
- 2023 Revenue Enhancements – This fiscal includes two enhancements to NAIC revenue. First, the group cap factor for Database Filing Fees, which has not been adjusted in three decades, will increase from three times the individual company cap to five to address inequalities in fees between large groups and individual filers. Second is a new fee to partially cover the ongoing costs of compiling, reviewing, and analyzing life insurance mortality experience data as required in VM-50 and VM-51 of the Valuation Manual.
- 2023 Staffing Requests – Workload increases related to regulatory support and operational business requirements necessitate the expansion of NAIC staff by 6.5 full-time employees. This fiscal excludes two headcount requested in the SERFF Modernization fiscal.
NAIC 2022 Budget
The NAIC adopted its 2022 Budget during the Joint Meeting of the Executive and Plenary Committees at the 2021 Fall National Meeting. The budget includes total revenues of $132.3 million and total expenses of $140.3 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 2022 projections included within the 2023 budget proposal and the 2022 budget shown above includes these additions.
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