LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE 75th Regular Session February 10, 1997 TO: Honorable David Sibley, Chair IN RE: Senate Bill No. 206 Committee on Economic Development By: Madla Senate Austin, Texas FROM: John Keel, Director In response to your request for a Fiscal Note on SB206 ( Relating to licensing requirements for certain insurance agents.) this office has detemined the following: Biennial Net Impact to General Revenue Funds by SB206-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 This bill would amend Articles 21.02, 21.07, 21.09, and 21.14 of the Texas Insurance Code. The bill would require that 07-00 license holders (State Salaried Special Agent or Travel Baggage Agent) pay an agent license fee of $50 for new licenses and $48 for renewal licenses. Currently, these agents are exempt from paying licensing fees. Methodolgy Article 21.07, Insurance Code would be amended to require that each officer or employee of any insurance company licensed to do business in Texas who negotiates or solicits any type of insurance on behalf of that company must be individually licensed. The Article would be amended to establish that a person negotiates or solicits insurance if that person makes an oral, written, or electronic communication to another person regarding insurance coverage, rates, benefits, or policy terms for the purpose of soliciting insurance. Per the Texas Department of Insurance (TDI), any additional workload required to implement this bill would be addressed with existing agency resources. However, the bill would create a revenue gain for the state. TDI assumes that 50% of the 4,692 agents registered in TDI FY 1996 Licensing Database with 07-00 licenses (State Salaried Special Agent or Travel Baggage Agent) would not apply due to cancellations, expirations, and multiple licenses. The estimated 2,346 that would apply would need to file new applications costing $50/each, creating a revenue gain of $117,300 in the fiscal year 1998. Renewal applications costing $48/each would be filed every two years after fiscal year 1998, creating a revenue gain of $112,608 in those years. TDI used actual license fees as stated in the Texas Administrative Code, Title 28, Section 19.802 to arrive at these revenue gains. 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 Texas Department of Insurance Operating Account/ GR-Dedicated 0036 1998 $117,300 1998 0 2000 112,608 2001 0 2002 112,608 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: 452 Department of Licensing and Regulation 454 Department of Insurance LBB Staff: JK ,TH ,BK