Department of Insurance Overview Joint Appropriations Committee on General Government 1
Department of Insurance Presentation Outline Authorizing Laws Responsibilities Budget Recent Legislative Actions Agency Request for Information 2
Department of Insurance Statutory Authority Commissioner of Insurance is a member of the Council of State Constitution - Article 3, Section 7 creates the office of Commissioner of Insurance, elected to four-year terms GS Chapter 58 establishes a department, which is charged with the execution of laws relating to insurance and other responsibilities placed under the Department. Designates the Commissioner of Insurance as the chief officer of the department. Designates the Commissioner as State Fire Marshal 3
Department Mission The North Carolina Department of Insurance serves the citizens of North Carolina through consumer protection and education, safety training and promotion, and regulation of specified activities and industries. This is accomplished by: Assuring an optimum marketplace in which consumers can readily purchase fairly-priced insurance products from sound, responsive entities Educating the public in loss prevention and safety awareness, and by developing life safety standards; Maintaining a well-managed, fiscally-responsible organization staffed by knowledgeable, courteous, professional employees. At all times, the affairs of the department are conducted in an open, ethical manner and in the best interests of the public. 4
Budget $37,000,000 $36,500,000 $36,000,000 $35,500,000 $35,000,000 $34,500,000 $34,000,000 $36.6M $35.7M $35.7M $35.5M $34.9M 2011-12 2012-13 2013-14 2014-15 2015-16 FY 2015-16 Actual Budget FY 2016-17 Authorized Budget Base Budget FY 2017-18 Base Budget FY 2018-19 *Total Requirements $47,260,232 $53,153,887 $50,457,372 $50,459,537 Receipts $10,613,460 $10,816,448 $10,666,688 $10,666,688 GF Appropriations $36,646,772 $42,337,439 $39,790,684 $39,792,849 Full Time Equivalent (FTE) Positions 416.18 420.18 420.18 420.18 Total Requirement includes Budget Code 13900. 5
Base Budget Composition FY 2017-19 Personal Services $35.6 M Purchased Services $6.2 M Supplies $268,509 Property, Plant, Equipment 1% Supplies <1% Purchased Services 12% Other 4% Aid and Public Assistance 12% Personal Services 70% Property, Plant, Equipment $350,697 Other Expenses & Intergovernment al Transfers $1.8 M Aid and Public Assistance $6.3 M 6
Revenues Insurance Regulatory Fee Set annually by the General Assembly Collected by Department of Revenue and transferred to DOI Currently 6.5% and generates approximately $36 M annually Rate may not exceed funds needed to defray cost of operations by Department of Insurance plus a reserve not to exceed 1/3 rd of the estimated cost of operations for upcoming year (G.S. 58-6-25) Last change was in 2015; added the Industrial Commission as an eligible expense for this fund Gross Premiums Tax (property) Additional tax on property coverage contracts Funds The Volunteer Fire Department Fund, Fireman s Relief Fund, and The Volunteer Safety Workers Compensation Fund Other Revenues and Receipts Premium Taxes, Insurance Company Business Licenses, Fee Receipts, Rate/Form Filings, Insurance Agent Examinations and other Insurance Company Fees are deposited directly into a non-tax revenue account and not available to DOI. 7
Other Receipts Premium payments by State Agencies Division of Motor Vehicles Inspection fees for North Carolina Rescue Relief Fund and Grant Program Federal Funds Fees Fines Senior Assistance Others License Certification Training Sale of publications Examinations Audits 8
Organizational Structure (function) Total FTE s 420.18* Commissioner of Insurance Company Services Group 100.08 FTE s Producers, Fraud and Products 95 FTE s Consumer Services 64 FTE s Office of State Fire Marshal 96 FTE s Administrative Services 64.74 FTE s * 2017-18 Base 9
Departmental Responsibilities License and Regulate the Insurance Industry; companies and professionals Educate consumers Respond to complaints The Insurance Commissioner is the State Fire Marshal Consumer Protection Services Assist consumers Monitor insurance companies compliance with laws and market conduct Regulatory Activities and Oversight of Other Industries 10
Administrative Services Division Management Activities Personnel Controller's Office Public Information Office General Counsel Information Systems Internal Audit Administrative Services FY 2017-18 Base Requirements $7,704,434 Receipts $121,726 Appropriations $7,582,708 FTEs 64.74 11
Company Services Group Solvency Oversight Regulate Market Examine Insurance Companies Monitor Troubled Insurers Captives Insurance 2013 legislation Company Services Group FY 2017-18 Base Requirements $10,567,762 Receipts $27,676 Appropriations $10,540,086 FTEs 100.08 Insurers Company Admissions Financial Analyses Examination Section Non-Insurers Oversight Consumer Disclosure reports Offering of insurance programs by employers 12
Consumer Assistance Group Consumer Assistance Respond to inquiries and complaints Consumer Assistance Group FY 2017-18 Base Requirements $6,392,063 Receipts $2,705,623 Appropriations $3,686,440 FTEs 64 Smart NC - External Review Program Assist consumers, employers, healthcare providers and insurance professionals Seniors Health Insurance Information Program (SHIIP) 13
Producers, Fraud, and Products Producers, Fraud & Products FY 2017-18 Base Requirements $9,433,728 Receipts $3,198,158 Appropriations $6,235,570 Regulation of Agents Licensing, Registering, and/or Granting Authority Continuing education Insurers, Brokers, Appraisers, Collection Agencies, Bail Bondsmen, Premium Finance Companies Budget is partially supported by receipts through course offerings Investigation of fraud Review rate filings Life & Health Property & Casualty Rate Bureau FTEs 93 14
Office of State Fire Marshal NC Building Code Occupational Licensure Certifications Manufactured Buildings State Property Fire Insurance Fund (SPFIF) Fire Protection Grant Fund Local Assistance Fire & Rescue Personnel Training Grants Administration & Safe Kids Office of State Fire Marshal FY 2017-18 Base Requirements $15,731,158 Receipts $4,613,505 Appropriations $11,117,653 FTEs 96.36 15
Office of State Fire Marshal Prevention, Programs, and Grants Division Grant Program Firefighters' Relief Fund Rescue Squad Workers Relief Fund Volunteer Fire Department Fund Matching Grant Volunteer Rescue/EMS Fund Matching Grant Annual Grant Amount $6.9 m $1 m $9.4 m $1.8 m **Other Programs Buckle Up Kids, Safe Kids NC, Fire Safety Efforts and Campaigns 16
FY 2016-17 Recent Legislative Actions Funding for Equipment and IT Infrastructure for the Albemarle Building $1 million Captives Insurance staffing $150k Consumer Assistance Staff 2 FTE s $122k Building Code Registry Online Accessibility $425k NR Fraud Investigator 1 FTE $95k FY 2015-16 Continuation Reviews of Grant Programs Industrial Commission - $2.4 million transfer from Regulatory Fund 17
Information Requested from Department of Insurance How do you measure your agency s effectiveness and outcomes? How do you measure efficiency within your agency/department? Do you have metrics that you use to monitor agency performance? If so, please provide. Are you planning any changes to the current structure of your organization? Will this impact your agency s budget? What are your overall goals for your department/agency over the next biennium? What are your budget requests/needs for the biennium? Please discuss the items in the Governor s budget. What is the status of the move into the newly renovated Albemarle Building? How have the disaster relief funds been administered? 18
Department of Insurance-Base Budget Review FY 2017-19 Base - Expenditures Personal Services 71% Aid and Public Assistance 12% Purchased Services 12% Other 4% Intragov. Transfers 1% General Fund Appropriatio n 79% FY 2017-19 Base - Source of Funds Other 17% Grants 1% Fees, Licenses, Fines 3.5% Requirements Actual FY 2015-16 Certified FY 2016-17 Authorized FY 2016-17 Increase/ (Decrease) FY 2017-18 Total Base FY 2017-18 Increase/ (Decrease) FY 2018-19 Total Base FY 2018-19 Personal Services $32,527,268 $35,526,531 $35,444,087 $140,057 $35,584,144 $140,057 $35,584,144 Purchased Services $4,822,764 $6,684,248 $6,839,847 ($682,549) $6,157,298 ($680,384) $6,159,463 Supplies $430,085 $872,715 $268,509 $0 $268,509 $0 $268,509 Property, Plant, Equipment $1,092,423 $1,065,788 $1,094,697 ($744,000) $350,697 ($744,000) $350,697 Other Expenses & Intergovernmental Transfers $2,047,944 $1,961,824 $2,064,514 ($252,023) $1,812,491 ($252,023) $1,812,491 Aid and Public Assistance $6,339,748 $7,197,524 $7,442,233 ($1,158,000) $6,284,233 ($1,158,000) $6,284,233 TOTAL REQUIREMENTS $47,260,232 $53,308,630 $53,153,887 ($2,696,515) $50,457,372 ($2,694,350) $50,459,537 Receipts Actual FY 2015-16 Certified FY 2016-17 Authorized FY 2016-17 Increase/ (Decrease) FY 2017-18 Total Base FY 2017-18 Increase/ (Decrease) FY 2018-19 Total Base FY 2018-19 Grants $340,654 $440,500 $358,696 $0 $358,696 $0 $358,696 Fees, Licenses, and Fines $2,789,462 $1,749,573 $1,813,073 $0 $1,813,073 $0 $1,813,073 Other $82,350 $74,570 $72,764 $0 $72,764 $0 $72,764 Governmental Transfers $7,400,994 $8,706,548 $8,571,915 ($149,760) $8,422,155 ($149,760) $8,422,155 TOTAL RECEIPTS $10,613,460 $10,971,191 $10,816,448 ($149,760) $10,666,688 ($149,760) $10,666,688 NET APPROPRIATION $36,646,772 $42,337,439 $42,337,439 ($2,546,755) $39,790,684 ($2,544,590) $39,792,849 FTE 416.18 521.68 420.18 0 420.18 0 420.18 1
Questions? 19