LEGISLATIVE BUDGET BOARD
                              Austin, Texas
                                     
                    FISCAL NOTE, 77th Regular Session
  
                            February 24, 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.),
               As Introduced
  
**************************************************************************
*  Estimated Two-year Net Impact to General Revenue Related Funds for    *
*  HB1195, As Introduced:  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.                                                             *
**************************************************************************
  
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:
  
***************************************************************************
*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