LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE
75th Regular Session
April 25, 1997
TO: Honorable John T. Smithee, Chair IN RE: House Bill No. 3536
Committee on Insurance By: Burnam
House
Austin, Texas
FROM: John Keel, Director
In response to your request for a Fiscal Note on HB3536 ( Relating
to regulating Lloyds Plan Underwriters, County Mutuals, and
reciprocal or interinsurance exchanges.) this office has detemined
the following:
Biennial Net Impact to General Revenue Funds by HB3536-As Introduced
Implementing the provisions of the bill would result in a net
impact of $0 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
The bill would amend the Insurance Code to remove provisions
that exempt county mutual insurers and Lloyds underwriters from
certain insurance regulation. The bill would add Section 6
to Article 5.101 of the Insurance Code to: (1) subject county
mutuals, Lloyds underwriters and reciprocal or interinsurance
exchanges to the flex rating system; (2) require the Texas Department
of Insurance (TDI) to establish separate benchmark rates for
county mutual insurers; and, (3) require county mutual insurers
to make a separate rate filing for each rating tier or rating
program.
It is estimated that TDI would need to hire 1.5
actuaries to handle the workload created by implementing the
provisions of the bill. The total cost to General Revenue Dedicated
Fund 036 would be $110,328 in FY 1998 and $102,609 per year
thereafter, including equipment and benefits.
Methodolgy
The total cost to General Revenue Dedicated Fund 036 is based
on the anticipated workload created from the development of
separate benchmark rates and the review of additional county
mutual rate filings. Costs are also based on the following
assumptions:
(1) Benchmarking for county mutual rates would
take 6 months and would be conducted annually.
(2) TDI estimates
that 300 county mutual rate filings would be submitted for annual
review.
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 Change in Number
Savings/(Cost) of State
from Texas Employees from
Department of FY 1997
Insurance
Operating
Account/
GR-Dedicated
0036
1998 ($110,328) 1.5
1998 (102,609) 1.5
2000 (102,609) 1.5
2001 (102,609) 1.5
2002 (102,609) 1.5
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 0
2000 0
2001 0
2002 0
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: Agencies: 454 Department of Insurance
LBB Staff: JK ,TH ,BK