LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 77th Regular Session
March 17, 2001
TO: Honorable David Sibley, Chair, Senate Committee on
Business & Commerce
FROM: John Keel, Director, Legislative Budget Board
IN RE: SB1673 by Jackson (Relating to review of the termination
of agreements with certain insurance agents; providing an
administrative penalty.), As Introduced
**************************************************************************
* Estimated Two-year Net Impact to General Revenue Related Funds for *
* SB1673, 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 Probable Revenue Change in Number of *
* Year Savings/(Cost) from Gain/(Loss) from State Employees from *
* Texas Department of Texas Department of FY 2001 *
* Insurance Operating Insurance Operating *
* Fund Account/ Fund Account/ *
* GR-Dedicated GR-Dedicated *
* 0036 0036 *
* 2002 $(534,205) $534,205 8.0 *
* 2003 (490,342) 490,342 8.0 *
* 2004 (490,342) 490,342 8.0 *
* 2005 (490,342) 490,342 8.0 *
* 2006 (490,342) 490,342 8.0 *
**************************************************************************
Technology Impact
Additional computers and software for eight Full-time equivalent
positions (FTEs) of $21,592 in the fiscal year 2002.
Fiscal Analysis
The bill adds Article 21.14A to Subchapter A, Chapter 21 of the Insurance
Code to establish grounds for which an insurer could, for cause,
terminate a contractual agreement with local recording agents or
solicitors and to establish prohibited grounds for termination. The bill
requires insurers to establish a termination review process when an
agent is involuntarily terminated.
The Texas Department of Insurance (TDI) estimates the provisions of the
bill would cause an increase in workload in three areas: (1) establishing
the lists of individuals who are eligible to serve as review board
members, (2) setting review board hearings, and (3) preparing the
Commissioner's orders following review and monitoring appeals of such
orders.
The Commissioner must set a hearing date for review board hearings
requested by agents and must notify the parties of the time, date and
place of the hearing, which must be conducted not later than the 30th day
after the request is received by the Commissioner.
The provisions of the bill require the Commissioner to set a fee in an
amount reasonable and necessary, but not to exceed $10 for each local
recording agent license and solicitor license, to cover the costs
incurred by TDI in administering the provisions of the bill.
The effective date of the bill is September 1, 2001.
Methodology
TDI estimates that the provisions of the bill would require a total of
eight additional FTEs including half of an attorney with expertise to
develop a method to establish a dispute resolution system and to compile
a list of individuals to serve as review board members. The attorney
would also assist in the development of rules to determine alternate
methods of selection for review board members, prepare Commissioner's
orders and monitor appeals of orders referred to the Office of the
Attorney General. Setting the hearings would require the services of two
docket clerks and one administrative technician for maintaining the
lists of eligible review board members.
TDI estimates about 700 additional requests for hearings per year as a
result of the bill. Currently, an attorney at TDI handles approximately
208 agent enforcement cases per year. Therefore, up to 3.5 additional
attorneys would be required to handle the increased workload. TDI
estimates that twenty-five percent of the estimated 700 terminations or
approximately 175 would be appealed. It would also require one legal
assistant to provide on-going research.
It is assumed the agency would adjust fees to offset any costs associated
with the implementation of the bill.
Local Government Impact
No significant fiscal implication to units of local government is
anticipated.
Source Agencies: 304 Comptroller of Public Accounts, 302 Office of
the Attorney General, 454 Texas Department of
Insurance
LBB Staff: JK, JO, DE, RT