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