The New York State Insurance Department (the "Department") continually seeks to increase efficiency and accuracy in all aspects of its operations. As such, the Department has instituted a new tracking system for examiner hours which are billed to each institution pursuant to Section 313 of the New York Insurance Law. This new system provides for the recording of more specific activity detail for each examination (both financial and market conduct), and for the first time permits the capture of off-site examination-specific work, of which the most important part is planning and review, heretofore not recorded.

Beginning in 2001, the examiner billing statements shall reflect the examination-specific off-site activity which will increase the accuracy of the actual cost of the examination, thereby reducing the general assessment levied by the Department under the provisions of Section 332 of the Insurance Law.

The Department believes this new billing system provides for an increasingly accurate and fair approach, since it captures more of the actual costs of examinations that each institution shall pay. This approach is also in keeping with the audit and consulting practices of most service firms.

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