In 2004, regulators agreed that insurers would not need to file and obtain a valuation of those securities assets they hold if they have been evaluated by a nationally recognized statistical rating organization.

NAIC said that change in 2004 resulted in less of a revenue shortfall than expected and consequently less of a need for an assessment, according to Catherine Weatherford, NAIC executive vice president and CEO.

Ms. Weatherford said that the NAIC will try to educate companies to understand that those filings, NAIC-1 and NAIC-2 securities, do not have to be filed. Some companies may have voluntarily chosen to file in 2004 as they transition into the new system, she said.

Many firms have already stopped filing those exempt securities, she said.

According to the NAIC, the number of those filings has declined to 4,097 filings from 24,790 securities in 2003.

The NAIC is in the process of reviewing whether other securities may be exempt and a pilot project could be established, Ms. Weatherford said.

As companies reduce their filings of these securities, an assessment could be made in subsequent years, she said. However, NAIC will be proactive in monitoring revenue on a monthly basis in order to determine if an assessment is needed, she continued. The non-NRSRO filing fee revenue anticipated and budgeted for 2004 totaled $4.5 million.

These non-NRSRO filings that are not exempt fell short of 2004 revenue projections by 9.4 percent or $387,850. However, the filing of exempt securities and filing of non-exempt securities late in 2003 that were completed in 2004 brought down the shortfall to $61,000. That shortfall will be waived, the NAIC said.