With the NAIC coming to Boston this weekend for its annual Summer meeting, Agency Checklists thought our readers would be interested in getting up to speed by seeing the latest results from the NAIC’s Annual Insurance Department Resources Report.
This years marks the 31st time the NAIC has published its annual Insurance Department Resources Report
The National Association of Insurance Commissioners (“NAIC”) has published its annual Insurance Department Resources Report (IDRR). The Report, released in two separate volumes each year, has been published annually for the past 31 years.
The first of the two-volume report focuses on the resources and regulatory activities of the 56 NAIC-member jurisdictions. This includes the 50 states plus U.S. Territories like Guam and Puerto Rico.
A snapshot of 2017
The following are four take-aways from Volume One helping to provide a snapshot of the past year in the U.S. insurance marketplace.
- California reported the largest 2019 budget, which is $58.8 million greater than the second-largest 2019 budget (New York).
- Total taxes collected increased by 3.3 percent.
- There were 5,954 domestic U.S. insurers in 2017 and 81 in Massachusetts.
- State insurance departments received nearly 300,000 official complaints and more than 1.7 million inquiries.
Number of Domestic Insurers & Regulated Entities in Mass.
This is a great visual showing the dispersion of insurers by state as of 2017.
As for Massachusetts:
- It has a total of 81 Domestic Insurers, two less than in 2016
- Life/Annuities: 16
- Property/Casualty: 48
- Health: 14
- Fraternal: 2
- Title: 1
- Risk Retention Group: 0
- Other: 0
- Its total number of Licensed Foreign Insurers is 1,314
- Life/Annuities: 373
- Property/Casualty: 697
- Health: 2
- Fraternal: 27
- Title: 17
- Risk Retention Group: 116
- Other: 82
- The number of Domiciled Self-Insured Groups or Pools is 25;
- The Commonwealth only counted four Domiciled Purchasing Groups in 2017.
Another interesting trend to note is the overall decrease in the number of domestic insurers since 2009, as depicted in this other graph from the NAIC Report.
2018/2019 Insurance Department Budgets
The Massachusetts Division of Insurance is funded 100 percent by a combination of fees and assessments. The 2019 projected budget for the Division is $14,583,000 while the 2018 Budget comes in at $14,412,000. Overall, looking at the past five year period, this represents a 3.39% from 2015-2019. In comparison with other states, Massachusetts’ budget put its in the middle of the pack at size to other states ranking it 30th.
In comparison, the ten states with the largest insurance department budgets are as follows (in descending order of 2019 Budget):
- California $216,627,000
- New York $157,852,000
- Texas $119,695,335
- Florida $87,026,993
- Illinois $48,671,900
- North Carolina $48,314,700
- Arizona $44,251,300
- Ohio $38,688,539
- Michigan $34,984,500
- Washington $33,484,263
As for Revenues, the Massachusetts Division of Insurance had total revenues in 2017 of $525,154,846, less than half of California’s 2017 Revenues which came in at $2,779,174,523. New York was the closest to California with $2,032,289,000 in Revenues.
The breakdown of the Division’s funding and expenses is 80% for Administration and Regulation expenses and the remaining 20% covering Operational expenses.
A look at some of the Division’s 2017 numbers:
- Total Revenues: $525,154,846
- Total Taxes: $349,544,128
- Fees & Assessments Collected: $174,032,463
- Fines and Penalties: $1,578,255
- Other Revenue: $0
Regulated Entities in the Division are represented by 83 Domestic Insurers in the Commonwealth, 1,297 Licensed Foreign Insurers, 25 Domiciled Self-Insured Groups or Pools, and 6 Domiciled Purchasing Groups. Of those 84 Domestic Insurers:
- 15 represent Life/Annuities,
- 49 are Property/Casualty,
- 15 are Health, with
- the remaining two representing Fraternal insurers.
As for Foreign Insurers:
- 370 are Life/Annuities,
- 686 are Property/Casualty,
- 2 are Health,
- 27 are Fraternal,
- 17 are Title,
- 117 are Risk Retention, and
- 78 are other.
Financial, Market Conduct Exams and Formal Hearings
The Massachusetts Division of Insurance completed 89 examinations last year, with 18 being Financial Only Exams while the remaining 71 where Market Conduct Exams. No combined Financial/Market Conduct Exams were conducted in 2017. Only one Regulatory Action was taken against a company in Massachusetts in 2017 and involved a Delinquency Order.
The Division conducted two formal hearings in 2017 involving the Acquisition and Holding Company as well two other formal hearings involving Rates. As for the other category, it conducted a total 37 Formal Hearings in this category in 2017.
The NAIC states that in 2017, a total of 9.03 million individuals and entities were licensed insurance providers and producers in the U.S.
In terms of Insurance Producers, Massachusetts had a total of 127,426 Individual Licensed Producers in 2017. Of that number, 30,476 comprised Resident Producers while 96,950 were Non-Resident Producers.
There were 7,174 Licensed Business Entities Producers. Of that number, 2,387 were Licensed Producers while 4,787 represented Non-Resident Producers.
In the Licensed Producers/Adjusters Category, there numbered 134,600 Producers in 2017l with 2,795 Surplus Lines Brokers, No Bail Bonds, 319 Adjusters, and 6,151 placed in the “Other” category.
Actions Against Producers
As for actions the Division took against Licensed Producers in 2017, Massachusetts initiated no Suspensions, 36 License Revocations, 64 Cease & Desist Violations and no Denial Orders.
The Division did impose 449 fines against Producers last year, collecting a total of $128,075 in Fines for the year. There were no other type of actions against Producers involving Restitution.
Consumer Complaints & Inquiries
The NAIC also noted that Massachusetts also only had 1,684 Consumer Complaints for 2017, significantly smaller than the state of New York, which logged 39,641 complaints or California which received the highest number in 2017 with 42,878 consumer complaints logged.
As for consumer inquires, Massachusetts received a total of 13,293 in 2017, a fraction of the number received by Florida, which had the highest number in the country with its Insurance Department receiving 296,677 inquiries during the same time period.