Honorable Jay Dean, Chair, House Committee on Insurance
FROM:
Jerry McGinty, Director, Legislative Budget Board
IN RE:
HB4074 by Morgan (Relating to licensing requirements for insurance umpires and appraisers; authorizing fees; providing an administrative penalty.), As Introduced
Estimated Two-year Net Impact to General Revenue Related Funds for HB4074, As Introduced: a positive impact of $2,975,000 through the biennium ending August 31, 2027.
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
2026
$1,400,000
2027
$1,575,000
2028
$1,575,000
2029
$1,575,000
2030
$1,575,000
All Funds, Five-Year Impact:
Fiscal Year
Probable Savings/(Cost) from Dept Ins Operating Acct 36
Probable Revenue Gain/(Loss) from Dept Ins Operating Acct 36
Probable Revenue Gain from General Revenue Fund 1
Change in Number of State Employees from FY 2025
2026
($212,267)
$212,267
$1,400,000
3.0
2027
($203,717)
$203,717
$1,575,000
3.0
2028
($203,717)
$203,717
$1,575,000
3.0
2029
($203,717)
$203,717
$1,575,000
3.0
2030
($203,717)
$203,717
$1,575,000
3.0
Fiscal Analysis
The bill would amend the Texas Insurance Code to add a chapter relating to the licensing and regulation of insurance umpires and appraisers. The bill would require the Texas Department of Insurance (TDI) to administer licenses, develop licensing examinations and standards, design continuing education course evaluations, and conduct enforcement activity related to the new license type.
This bill would take effect September 1, 2025. However, umpires or appraisers who are practicing before the effective date would not be required to comply until September 1, 2027, but would be required to comply with temporary licensing procedures.
Methodology
Based upon analysis provided by TDI, this estimate assumes that the agency would require additional 3.0 full-time equivalent positions (FTEs) to implement the provisions of the bill. The agency anticipates needing 3.0 Insurance Specialist FTEs ($51,024 each fiscal year with $15,266 in estimated benefits) to manage complaints and disputes, process applications, and review continuing education. This estimate assumes an additional annual cost of $13,396 related to the operating costs of the new staff and a one-time cost of $8,550 in fiscal year 2026 related to onboarding costs.
This estimate assumes any appropriations made to implement the provisions of the bill would be appropriated from the Texas Department of Insurance Operating Account Fund 36. This account is a self-leveling account, and any expenditure increases would be reflected in the annual adjustment of the maintenance tax rates for insurance carriers. Therefore, the overall revenue into the account will equal expenses.
Based upon analysis provided by TDI and the Comptroller of Public Accounts, this estimate assumes a potential licensing population of 28,000. This estimate assumes that the licensing and renewal fee would be set at $50 with a late penalty fee of $25. The issued licenses would be valid for two years, but they would have to be renewed before the last day the licensee's birth month, resulting in lower licensing terms. Accounting for these lower terms, this estimate assumes an annual revenue of $1.4 million each fiscal year to the credit of the General Revenue Fund 001. Additionally, this estimate assumes that beginning in fiscal year 2027, one-quarter of licensees will pay late penalty fees, resulting in an additional annual revenue of $175,000 to the credit of the General Revenue Fund 001.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies:
304 Comptroller of Public Accounts, 454 Department of Insurance