The National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer review, and coordinate their regulatory oversight.
Audit Analytics’ insurance database includes normalized financial, auditor, and demographical information from over 4,300 NAIC Insurers since 2010. Key data points include assets, revenue, and auditor of record.
As a follow-up to our recent NAIC auditor market share post, the analysis below focuses on the accounting & auditing and legal fees disclosed during 2015.1
Accounting and auditing fees as defined by NAIC, includes fees of public accountants and consulting actuaries. Blue Cross Blue Shield of North Carolina disclosed the highest accounting and auditing fees at $189,039,305. When looking at these fees as a percentage of revenue, two other companies in addition to BCBS of NC, exceeded the 2 percentile threshold. Those companies were Blue Cross Blue Shield of Michigan Mutual Insurance Company and Horizon Healthcare Services, Inc.
A large portion of the NAIC insurance companies are part of a larger group of insurance c
ompanies which typically helps the group offset liabilities, and over exposure.
Anthem Inc Grp, which took into account 31 insurance companies, disclosed the highest amount of accounting and auditing fees as aggregated by insurance group. Aetna and UnitedHealth Group followed with $196M and $195M, respectively.
Next we turn to legal fees, which are defined by NAIC as payments for legal expenses as disclosed on the annual statement. BCBS of MI Grp, which disclosed legal fees from three individual insurance companies, had by far the most legal fees per group. Combined, the next largest four groups (by legal fees disclosed) didn’t even total what BCBS of MI GRP reported.
Of the three companies belonging to the BCBS of MI group, Blue Cross Blue Shield of 
Michigan Mutual Insurance Company accounted for a majority of those fees, over 99.9%.
Finally, when looking at fees by business line, health insurance companies pay about the same average legal fees as do life, accident, and health companies. When looking at accounting and auditing fees, health insurance companies pay almost $3M more in average fees than the next closest business line.
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1. Although the NAIC annual statement can reflect negative accounting & auditing and/or legal fees (for reasons of adjustments, credits, estimations, group impacts, etc.), only positive fees were taken into account for this analysis.↑