LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
74th Regular Session
April 4, 1995
TO: Honorable John Smithee, Chair IN RE: House Bill No. 149
Committee on Insurance By: Clemons
House of Representatives
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on House Bill No.
149 (relating to motor vehicle insurance coverage and liability
for motor vehicle accidents) this office has determined the
following:
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
The bill would amend the Insurance Code to establish a no-fault
insurance system requiring motor vehicle insurance policies to
provide first party benefits to the named insured, household
members, passengers not otherwise covered and pedestrians for
bodily injury arising from the use of a motor vehicle in Texas.
The bill would also require the Insurance Commissioner to reduce
the relevant benchmark rate by 12 percent upon finding that such
a reduction is warranted. (Dates specified for rate reduction
provisions of the bill may cause implementation problems.) The
effective date of the legislation would be September 1, 1996 and
would apply to policies issued or renewed on or after January 1,
1996.
Implementation of the bill would require major changes in rules
and automobile liability policies by the Department of Insurance.
Additional resources would be requested for rule adoption
proceedings for policy changes, responses to inquiries from
agents and the public regarding the changes, technical review of
endorsements, preparation of Commissioner Orders, consumer
education, and advisory committee oversight.
The fiscal implications of the bill on state revenue cannot be
estimated. A benchmark rate reduction could result in lower
insurer receipts for insurance premiums, which in turn could lead
to lower state receipts for the Insurance Occupations Tax
(deposited to the General Revenue Fund and the Foundation School
Fund) because the tax is based on premium volume.
The probable fiscal implication of implementing the provisions of
the bill during each of the first five years following passage
is estimated as follows:
Fiscal Probable Cost Out Change in
Year of Department Number of State
Insurance Employees from
Operating FY 1995
Fund 036
GR Consolidated
1996 $192,727 3.5
1997 167,617 3.5
1998 167,617 3.5
1999 167,617 3.5
2000 167,617 3.5
Similar annual fiscal implications would continue as long as the
provisions of the bill are in effect.
No fiscal implication to units of local government is
anticipated.
Source: Department of Insurance
LBB Staff: JK, RM, RR