Governor Andrew Cuomo in his State of the State Address on Wednesday formally announced plans to merge the Insurance Department, Banking Department and Consumer Protection Board. The merger would give birth to the Department of Financial Regulation.
“We applaud Governor Cuomo for his efforts to reduce state spending,” Ellen Melchionni, president of the New York Insurance Association (NYIA) said. “Since the insurance and banking departments are funded by the respective industries these entities regulate, we look forward to a reduction in the assessments levied on New York businesses.”
The New York State Insurance Department is funded by 332 assessments paid by domestic insurance companies. The assessments have increased at an alarming rate over the past few years. The majority of the money collected is being used illegally to fund programs that are not part of the Insurance Department’s operations. By law the assessments are solely for the operations of the Insurance Department, but the state has been “sub-allocating” the money to other agencies for programs that are not related to insurance.
“Since 2008 the assessments on domestic insurers have nearly doubled and the sub-allocations have nearly tripled,” Melchionni said. “NYIA filed a lawsuit against the state last year to end this illegal practice. The suit is ongoing.”
The insurance industry is a vital component of New York’s economy, employing more than 185,000 New Yorkers. The industry contributed $32.4 billion to the gross state product (GSP) in 2007, accounting for 3.4 percent of the state GSP.
The New York Insurance Association (NYIA®) is a state trade association that has represented the property and casualty insurance industry for more than 125 years. For more information about NYIA, visit www.nyia.org.