LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 76th Regular Session
April 23, 1999
TO: Honorable John Smithee, Chair, House Committee on
Insurance
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB3304 by Thompson (relating to the books and records of
insurance), Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB3304, Committee Report 1st House, Substituted: negative impact *
* of $(247,113) through the biennium ending August 31, 2001. *
* *
* The bill would make no appropriation but could provide the legal *
* basis for an appropriation of funds to implement the provisions of *
* the bill. *
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General Revenue-Related Funds, Five-Year Impact:
****************************************************
* Fiscal Year Probable Net Positive/(Negative) *
* Impact to General Revenue Related *
* Funds *
* 2000 $0 *
* 2001 (247,113) *
* 2002 (238,360) *
* 2003 (238,360) *
* 2004 (238,360) *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Probable Probable Change in *
* Year Revenue Savings/(Cost) Revenue Number of State *
* Gain/(Loss) from Texas Gain/(Loss) Employees from *
* from General Department of from Texas FY 1999 *
* Revenue Fund Insurance Department of *
* 0001 Operating Insurance *
* Account/ Operating *
* GR-Dedicated Account/ *
* 0036 GR-Dedicated *
* 0036 *
* 2000 $0 $(247,113) $247,113 2.0 *
* 2001 (247,113) (238,360) 238,360 2.0 *
* 2002 (238,360) (238,360) 238,360 2.0 *
* 2003 (238,360) (238,360) 238,360 2.0 *
* 2004 (238,360) (238,360) 238,360 2.0 *
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Fiscal Analysis
The bill would amend Article 1.28, Texas Insurance Code to permit the
maintenance of books and records at non-affiliated branch or agency
offices, and to require that books, records and accounts be available
physically or via electronic means at a designated location within the
state within three business days of a request by the Texas Department of
Insurance (TDI).
The bill would also exempt non-affiliated branch or agency offices from
the provisions of Article 1.28 of the Insurance Code, allowing
non-afilliated offices to claim a credit against premium taxes for
examination expenses paid to TDI.
The act would take effect September 1, 1999.
Methodology
TDI estimates the bill would result a total of 40 insurers who will
choose to locate their records outside the state. Although the bill
requires insurers to provide requested books, records or accounts at a
designated location within the state within three business days, TDI
assumes on-site examinations will be continue to be conducted at the
insurer's out-of-state location because of requirements to verify source
documents and to interview company staff.
TDI estimates the need for $136,500 in annual travel costs, and two
additional FTEs and associated operating costs in 2000 through 2004 for
increased on-site examinations outside the state to be paid out of
General Revenue-Dedicated Texas Department of Insurance Operating Account
#36. TDI estimates these costs will be recovered through examination
billings to be deposited into General Revenue-Dedicated Texas Department
of Insurance Operating Account #36.
TDI also estimates the above examination costs will be claimed as premium
tax credits, thereby reducing deposits to General Revenue in 2001
through 2004. These credits would begin in 2001 based on the assumption
of a one year lag before companies take these tax deductions.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 454 Department of Insurance
LBB Staff: JK, TH, DP