LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 6, 1997
TO: Honorable John T. Smithee, Chair IN RE: House Bill No. 3027
Committee on Insurance By: Smithee
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB3027 ( Relating
to recoupment of certain professional liability discounts in
lieu of reimbursement under Chapter 110, Civil Practices and
Remedies Code; and declaring an emergency.) this office has
detemined the following:
Biennial Net Impact to General Revenue Funds by HB3027-As Introduced
Implementing the provisions of the bill would result in a net
negative impact of $(2,200,000) to General Revenue Related Funds
through the biennium ending August 31, 1999.
The bill would make no appropriation but could provide the legal
basis for an appropriation of funds to implement the provisions
of the bill.
Fiscal Analysis
This bill would amend the Texas Insurance Code by adding Section
10, relating to the recoupment of certain premium liability
insurance discounts.
Under current law, insurers that have
filed and issued professional liability insurance premium discounts
to health care professionals are eligible to receive indemnification
for malpractice claims. Section 10 would allow insurers who
have filed and issued premium discounts to health care professionals
to be eligible to receive a premium tax credit in lieu of indemnification
for claims. Such an election would be made as a credit to an
annual premium tax return filed on or before March 1, 1999.
The annual premium tax credit would be allowed at a maximum
rate of 20 percent of liability insurance premium discounts
granted. The amount of the discount could not exceed the total
amount of premium taxes due.
It is estimated by the Comptroller
that all eligible insurers would claim a 20% credit beginning
March 1, 1999. Since premium taxes collected are deposited
into General Revenue, this would result in a revenue loss to
General Revenue of approximately $2.2 million per year, beginning
in fiscal year 1999.
Methodolgy
The Comptroller projected premium discount figures from the
Texas Department of Insurance forward to 1998 and then adjusted
downward to account for discounts that would not be eligible
to receive a premium tax credit. The Comptroller assumed that
all eligible insurers would claim a 20% credit beginning in
March of 1999.
The probable fiscal implications of implementing the provisions
of the bill during each of the first five years following passage
is estimated as follows:
Five Year Impact:
Fiscal Year Probable Revenue
Gain/(Loss) from
General Revenue
Fund
0001
1998
1998 (2,200,000)
2000 (2,200,000)
2001 (2,200,000)
2002 (2,200,000)
Net Impact on General Revenue Related Funds:
The probable fiscal implication to General Revenue related funds
during each of the first five years is estimated as follows:
Fiscal Year Probable Net Postive/(Negative)
General Revenue Related Funds
Funds
1998 $0
1999 (2,200,000)
2000 (2,200,000)
2001 (2,200,000)
2002 (2,200,000)
Similar annual fiscal implications would continue as long as
the provisions of the bill are in effect. Section 10 of the
bill would allow a premium credit rate of 20 percent per year
"for five or more successive years" after March 1, 1999. This
could mean that there would be no similar fiscal impact after
fiscal year 2003.
No fiscal implication to units of local government is anticipated.
Source: Agencies: 454 Department of Insurance
302 Office of the Attorney General
304 Comptroller of Public Accounts
LBB Staff: JK ,TH ,BK