Insurers have expressed concerns to the nation's regulators over their plans to charge higher fees for the operations of the Securities Valuation Office.
Their reaction was voiced at Wednesday's National Association of Insurance Commissioners' budget hearing where the Securities Valuation Office fees were a major focus.
The NAIC has proposed a budget for 2007 which calls for an estimated 6-to-7 percent increase in both expenditures and revenues.
Phillip Carson, assistant general counsel for the American Insurance Association, told the Ex1 Subcommittee that the indexing of the SVO database fee cap would make it too easy to raise them.
The SVO analyzes the financial strength of insurer investments.
“If the NAIC is still committed to reducing reliance on database fees, then we strongly urge the NAIC to resist the temptation to raise database fees, and instead, focus on where and how the NAIC can provide important and valuable services for which a fee would be appropriate,” he said.
Wayne Mehlman, counsel for the American Council of Life Insurers, said he did not believe caps on database fees should be increased in years where surpluses are projected. He added that the 8 percent increase in budget for the SVO fees was more than double the Consumer Price Index.
“Given that the SVO should not be rating hybrid securities during 2007, the substantial increase in the budget amount of nonrated securities is also questionable,” he wrote.
Stephen Broadie, financial regulation manager for the Property Casualty Insurers Association of America (PCI), said there was no justification for the increase in SVO filing fees insurers are charged.
In addition, he said it was time to consider the $1.58 million annual assessment on insurers that hold over $1 billion in non-government and preferred stock, as it was determined to be a temporary measure to make up for revenue lost for the exemption of certain securities from filing requirements.
The subcommittee approved the budget Wednesday and sent it to the full membership, which will vote on it next month at the group's annual meeting.
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