NEW YORK—New York state legislative leaders have agreed to Gov. Andrew Cuomo’s proposal to merge the state banking and insurance departments into one new agency, the governor announced.
Establishing the Department of Financial Services is among a number attempts to improve government efficiency that the governor proposed as part of his 2011-2012 state budget.
“I have said that New York is at a crossroads—one road leading to further dysfunction and decline, the other towards fiscal responsibility and government efficiency,” Gov. Cuomo said Sunday in a statement. “I believe this budget puts us on the right path” of cutting waste and inefficiency, he said.
Gov. Cuomo lauded the budget agreement reached with state Senate Majority Leader Dean Skelos and Assembly Speaker Sheldon Silver that, in addition to merging the insurance and state banking departments, would eliminate a $10 billion deficit without new taxes or borrowing.
The Department of Financial Services is to consolidate the functions, operations and staff of the Banking and Insurance Departments, along with related segments of the state’s Consumer Protection Board, according to the governor’s budget presentation in February.
His budget recommended $564 million in funding for the combined department, up 1.1% over the combined 2010-2011 budgets of the individual banking and insurance departments.
The funding would allow more on-site examinations of insurance companies, resulting in “savings to the insurance industry by reducing costly direct-pay examinations for which insurers contract with outside vendors to fulfill regulatory requirements,” according to Gov. Cuomo’s February proposal.
The proposal also requested that the Department of Financial Services, whose superintendent would be appointed by the governor with consent of the state Senate, would be charged with ensuring “the safety and soundness of all regulated entities.”
The New York-based Risk & Insurance Management Society Inc. warned in January that merging the departments could weaken consumer protection. But RIMS also said it recognized the validity of Gov. Cuomo’s goal to reduce costs and increase efficiency.
The $132.5 billion budget plan would reduce the state’s spending by more than 2% from the current year, taking steps that range from eliminating prison beds to capping next year’s Medicaid spending.