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