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WASHINGTON-The National Assn. of Insurance Commissioners is proposing a $40.55 million operating budget for 1998, representing a 1.94% increase in total expenses and a 4.42% increase in total revenues compared with its 1997 budget.

The budget includes significant reductions in virtually all lines of expense to offset the cost of new projects the NAIC leadership has designated as priorities for the coming year, the organization said in a statement.

Priority projects that are likely to increase expenses include increased monitoring of federal legislative activity and increased involvement of members in international regulatory activities.

For example, NAIC travel costs are projected to increase more than 28% to $1.5 million "due to increased involvement in international activities, higher cost of national meeting sites and escalating air fares generally," according to budget papers presented during the NAIC's fall meeting in Washington last month.

Other key expense items include a 4.16% increase in salary costs to nearly $16.8 million. That reflects a 3.7% increase for most of the 326 existing full-time positions as well as salaries for 16 new staff members of the NAIC and its affiliates.

In addition, revenues are expected to increase 4.42% to $42.8 million in 1998 compared with 1997.

Actual revenues in 1997 are projected to be over budget due to the addition of filing fees that accompany 393 health maintenance organization annual statement filings, which is being recognized for the first time in this budget, though HMOs paid them last year. However, the increase is offset by decreases due to delays in publication development and delivery as well as lower-than-estimated registration fees from attendees at national meetings.

The NAIC budget represents "a cost-effective plan for providing services to our members' states while maintaining our efforts to streamline the NAIC operations," NAIC President Josephine Musser, the Wisconsin insurance commissioner, said in a statement.

The 1998 budget holds the line on current database fees, state assessments and national meeting registration fees, she noted.

The NAIC's major source of funding is database fees paid by insurers, followed by income from publications and subscriptions. States are also assessed to pay NAIC expenses.