OFFICE OF FISCAL ANALYSIS
Legislative Office Building, Room 5200
Hartford, CT 06106 (860) 240-0200
http://www.cga.ct.gov/ofa
sSB-482
AN ACT ESTABLISHING THE FINTECH REGULATORY SANDBOX
PROGRAM AND THE INSURTECH REGULATORY SANDBOX
INITIATIVE.
Primary Analyst: LG 4/25/22
Contributing Analyst(s): ME, MP
OFA Fiscal Note
State Impact:
Agency Affected Fund-Effect FY 23 $ FY 24 $
Banking Dept. BF - Cost 180,163 to
200,163
180,163 to
200,163
Banking Dept. BF - Revenue
Loss
See Below See Below
Banking Dept. BF - Revenue
Gain
See Below See Below
Resources of the General Fund GF - Potential
Revenue Gain
See Below See Below
Department of Emergency
Services and Public Protection
Applicant
Fingerprint Card
Submission
Account -
Potential
Revenue Gain
See Below See Below
Insurance Dept. IF - Cost 201,000 to
221,000
201,000 to
221,000
Note: GF=General Fund; IF=Insurance Fund; BF=Banking Fund
Municipal Impact: None
Explanation
This bill establishes a Fintech Regulatory Sandbox program and
requires the Insurance Commissioner, in consultation with the CTNext
board of directors, to establish an Insurtech Regulatory Sandbox
initiative. The bill is anticipated to result in costs, revenue gain, and
revenue loss to the Department of Banking (DOB), potential revenue
gain to the Department of Emergency Services and Public Protection 2022SB-00482-R000622-FN.DOCX Page 2 of 3
(DESPP) and the General Fund, and costs to the Insurance Department
(DOI). The bill also establishes an 11-member Innovation Council within
the DOB to oversee the Fintech program. The fiscal impact of the bill is
described by section below.
Section 1 establishes the Fintech Regulatory Sandbox program.
While licensing fees may vary by type and agency, DOB consumer
credit licensing fees are approximately $1,000 annually. To the extent
fewer licenses are issued as a result of this program, there is a potential
revenue loss to the DOB.
This section also establishes an Innovation Council and requires them
to prescribe the application process and amount of the application fee
for the Fintech program. The bill also permits the council to impose a
participation fee, and other additional fees, on each applicant approved
for the program. This results in a potential revenue gain to DOB, which
is dependent on the fee amounts and number of fees.
The Innovation Council may also require certain applicants and their
employees involved with the innovative products to complete a
criminal history records check resulting in a potential revenue gain to
the General Fund and the Applicant Fingerprint Card Submission
Account. The DESPP conducts state background checks for $75 per
person and to the extent additional background checks are requested
there is a potential revenue gain to the state. State background checks
require fingerprinting, which DESPP conducts for $15 per person
resulting in a potential revenue gain to the Applicant Fingerprint Card
Submission Account
1
.
Members of the Innovation Council are required to serve without
compensation but will be reimbursed for necessary expenses incurred
when performing their duties within available funds. As the bill allows
for expenses without detailing what constitutes an eligible expense,
there may be associated costs that are uncertain at this time. The DOB
1
Funds in the Applicant Fingerprint Card Submission Account are used for IT support
and maintenance for the fingerprinting systems. 2022SB-00482-R000622-FN.DOCX Page 3 of 3
may also incur costs of up to $20,000 in Other Expenses for marketing
and communication which will be dependent on the methods the
Innovation Council uses to publicize the program.
It is anticipated that DOB will require one Staff Attorney 2 position
to provide support for the Fintech Regulatory Sandbox program as DOB
currently does not have the expertise to provide oversight required by
this bill. The salary range for a Staff Attorney 2 is $90,203 - $115,434.
Based on the starting salary and fringe benefit rate charged to the
Banking Fund
2
, this position has an annualized cost of approximately
$180,163 to the Banking Fund in FY 23 and FY 24.
Section 2, which requires the Insurance Department to establish an
Insurtech Regulatory Sandbox, results in an annual cost of between
$201,000 and $221,000 to the Insurance Fund in FY 23 and FY 24. It is
anticipated that the Insurance Department will need to hire a new
Insurance Program Manager beginning July 1, 2023, to establish and
oversee the initiative at annual cost of $100,585 for salary and $100,313
for fringe benefits
2
. The Insurance Department may also incur costs of
up to $20,000 for marketing and communications to the extent the
agency elects to publicize the program.
The Out Years
The annualized ongoing fiscal impact identified above would
continue into the future subject to the number of foregone licenses, the
program fees collected, the number of background checks, and changes
to employee wage and benefit costs. Any costs for marketing and
communications are anticipated to decrease in the out years after the
programs are well established.
Sources: Core-CT Financial Accounting System
2
The fringe benefit costs for employees funded out of other appropriated funds are
budgeted within the fringe benefit account of those funds, as opposed to the fringe
benefit accounts within the Office of the State Comptroller. The estimated active
employee fringe benefit cost associated with most personnel changes for other
appropriated fund employees is 99.73% of payroll in FY 23.