NEW YORK—The New York State Department of Financial Services officially launched Monday with five main divisions and an initiative to partner with the industry on job creation.

New York's DFS “will help industries thrive,” said Benjamin M. Lawsky, the department's superintendent of Financial Services, at a launching ceremony held at Pace University in New York on Monday.

And the savings generated from centralizing the two agencies into one will be passed on to insurance companies, which have long funded their regulators by paying fees, experts say.

“If our budget is smaller, that means we're assessing the industry less and taxing the industry less to pay for our regulations and our operations,” Mr. Lawsky said in an interview with journalists after his speech. “When you talk about a way to help try and kick-start the economy and help these industries thrive, that's a great place to start.”

New York Gov. Andrew M. Cuomo created the department in March by merging the New York State Banking Department and the New York State Department of Insurance.

Its insurance division will carry on the regulation of all life, property and health insurance activities in New York, while the capital markets division will monitor the latest developments and products in the industry in an effort to better police systemic risks to the financial system.

The DFS also will have a financial frauds and consumer protection division that brings together the fraud and consumer units of the former banking and insurance departments. It can conduct investigations, research, studies and analyses of issues affecting consumers of most financial products and services.

The new department's real estate finance division will monitor all aspects of the mortgage industry. And the DFS' banking division will continue regulating state-chartered banks, along with other financial services providers such as mortgage servicers and originators, check cashers, money transmitters and budget planners.

The proposal to create one regulatory agency for banking and insurance was part of the state's budget, which passed early this year. At the time, the Risk & Insurance Management Society Inc. had said it hoped the blending of the two regulatory agencies wouldn't reduce the insurance department's effectiveness. Insurer trade groups, however, were supportive.

“The merger makes sense,” said Joseph M. Pastore Jr., a professor emeritus of management at Pace's Lubin School of Business, in a statement Sept. 30. “By combining banking and insurance sector oversight in the same organization, while mindful of the sector distinctions between banking and insurance, the state's task of providing regulatory oversight for these related, but distinct, sectors is greatly enhanced.”

Deputy Superintendent for Financial Services James J. Wrynn, who formerly headed the stand-alone insurance department, will lead the DFS' new jobs initiative. His team will attempt to persuade businesses to bring jobs and capital to New York, Mr. Lawsky said.

Gov. Cuomo isn't the first to propose a combination of departments. Florida, for example, merged its Departments of Insurance, Treasury, State Fire Marshal and Department of Banking and Finance into a Department of Financial Services in January 2003.

Most states, however, keep their banking and insurance agencies separate, experts say.