LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 76th Regular Session
  
                               May 12, 1999
  
  
          TO:  Honorable John Smithee, Chair, House Committee on
               Insurance
  
        FROM:  John Keel, Director, Legislative Budget Board
  
       IN RE:  SB956  by Madla (relating to the regulation of certain
               insurance agents and to the consolidation of insurance
               agent licenses; providing penalties), Committee Report
               2nd House, Substituted
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  SB956, Committee Report 2nd House, Substituted: impact of $0          *
*  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.                                                             *
**************************************************************************
  
General Revenue-Related Funds, Five-Year Impact:
  
          ****************************************************
          *  Fiscal Year  Probable Net Positive/(Negative)   *
          *               Impact to General Revenue Related  *
          *                             Funds                *
          *       2000                                   $0  *
          *       2001                                    0  *
          *       2002                                    0  *
          *       2003                                    0  *
          *       2004                                    0  *
          ****************************************************
  
All Funds, Five-Year Impact:
  
**************************************************************************
*Fiscal        Probable         Probable Revenue     Probable Revenue    *
* Year    Savings/(Cost) from   Gain/(Loss) from     Gain/(Loss) from    *
*         Texas Department of  Texas Department of  Texas Department of  *
*         Insurance Operating  Insurance Operating  Insurance Operating  *
*              Account/             Account/             Account/        *
*            GR-Dedicated         GR-Dedicated         GR-Dedicated      *
*                0036                 0036                 0036          *
*  2000             $(150,000)         $(4,571,000)          $13,286,250 *
*  2001                      0          (4,571,000)           11,642,500 *
*  2002                      0          (4,571,000)               62,500 *
*  2003                      0          (4,571,000)               62,500 *
*  2004                      0          (4,571,000)               62,500 *
**************************************************************************
  
Technology Impact
  
The Texas Department of Insurance (TDI) estimates a cost of $150,000 for
contractors to revise the agency's automated tracking system for the
conversion/consolidation of the 44 license types now being issued to 17
license types.
  
  
Fiscal Analysis
  
The bill would consolidate the types of licenses issued to insurance
agents and entities, and would promote uniformity in licensing,
examination, continuing education, and disciplinary actions allowable
under the law for insurance agents in Texas.  The bill would also reduce
the licensing requirements for non-resident agents, would require
licensing of fraternals and would allow entities to receive surplus lines
licenses..

The bill would extend the renewal cycle for all TDI licenses to five
years from the current two year cycle and increase the renewal fee from
$48 to $120.

The effective date of the bill would be September 1, 1999.
  
  
Methodology
  
TDI estimates there are currently 193,000 individuals/entities with
insurance licenses, with approximately half (96,500) of the licenses
expiring in fiscal year 2000 and the other half in fiscal year 2001.
Applying the new renewal fee of $120 would result in a gain of
$11,580,000 in 2000 and in 2001 to the General Revenue-Dedicated Texas
Department of Insurance Operating Account No. 36.  Additional revenues of
$1,706,250 in 2000 to TDI Operating Account No. 36 are estimated from
new fees for non-resident agents,  surplus lines and fraternal licensees.
Because of the five year renewal cycle, the only revenue increases in
2002 through 2004 are estimated to be from new surplus lines licenses.

TDI estimates the consolidation of licenses and conversion of the license
renewal cycle to five years would result in an annual loss to the
General Revenue-Dedicated Texas Department of Insurance Operating
Account No. 36 of $4,571,000 in 2000 through 2004.
  
  
Local Government Impact
  
No fiscal implication to units of local government is anticipated.
  
  
Source Agencies:   
LBB Staff:         JK, TH, DP