LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 31, 2001
TO: Honorable John T. Smithee, Chair, House Committee on
Insurance
FROM: John Keel, Director, Legislative Budget Board
IN RE: HB1195 by Brimer (Relating to rates, forms, and
maintenance taxes for commercial automobile insurance.),
Committee Report 1st House, Substituted
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* Estimated Two-year Net Impact to General Revenue Related Funds for *
* HB1195, Committee Report 1st House, Substituted: positive impact *
* of $0 through the biennium ending August 31, 2003. *
* *
* 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 *
* 2002 $0 *
* 2003 0 *
* 2004 0 *
* 2005 0 *
* 2006 0 *
****************************************************
All Funds, Five-Year Impact:
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*Fiscal Probable Savings/(Cost) from Change in Number of State *
* Year Texas Department of Insurance Employees from FY 2001 *
* Operating Fund Account/ *
* GR-Dedicated *
* 0036 *
* 2002 $108,072 (3.0) *
* 2003 108,072 (3.0) *
* 2004 108,072 (3.0) *
* 2005 108,072 (3.0) *
* 2006 108,072 (3.0) *
***************************************************************************
Fiscal Analysis
The bill would move commercial auto insurance from regulation under
Article 5.06 and 5.101 to Article 5.13-2 of the Insurance Code. The
change in regulatory authority would eliminate the current Insurance Code
requirements for commercial auto insurers to use the benchmark rate
system, rules and forms. Commercial auto form filings would be subject
to disapproval by the Commissioner but if no action is taken on a form
filing within 60 days, the filing would be deemed approved.
The bill would take effect September 1, 2001.
Methodology
The function of processing experience ratings and data, which is related
to the benchmark system, will no longer be needed for commercial
automobile insurance regulation. At the same time, the workload related
to processing and reviewing rate and form filings will increase as well
as the number of rate filings needing actuarial review. The result would
be an overall workload reduction equivalent to three (3) Full-time
equivalent (FTE) positions.
Currently, four FTEs are needed to process automobile experience ratings
and associated data. This work is performed by insurance specialists and
an insurance technician. Actuarial staff is also involved in the review
of rate filings for commercial auto insurance. Processing commercial
automobile experience ratings and associated data will no longer be
needed, thus eliminating the need for four (4) FTEs.
TDI estimates workload associated with reviewing commercial automobile
policy forms and endorsement filings will substantially increase. TDI
expects insurers to expand the variety of products offered as they are no
longer limited in the type of endorsements they file. TDI expects an
increase in the number of insurers offering commercial auto policies. TDI
estimates that there would be 100 additional endorsements as a result of
offering new products and it would require one half (.5) FTE and an
additional one half (.5) FTE for an anticipated 400 additional rate
filings.
TDI also estimates that there would be a savings related to a reduction
of professional fees (Actuarial consulting) since the Commissioner would
no longer need to contract for the services.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 454 Texas Department of Insurance, 304
Comptroller of Public Accounts
LBB Staff: JK, JO, RT, DE