LEGISLATIVE BUDGET BOARD Austin, Texas FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION May 16, 2011 TO: Honorable John T. Smithee, Chair, House Committee on Insurance FROM: John S O'Brien, Director, Legislative Budget Board IN RE:SB1213 by Carona (Relating to consumer protections in the purchase of life settlement contracts; imposing penalties.), As Engrossed Estimated Two-year Net Impact to General Revenue Related Funds for SB1213, As Engrossed: a positive impact of $52,500 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
LEGISLATIVE BUDGET BOARD
Austin, Texas
FISCAL NOTE, 82ND LEGISLATIVE REGULAR SESSION
May 16, 2011
TO: Honorable John T. Smithee, Chair, House Committee on Insurance FROM: John S O'Brien, Director, Legislative Budget Board IN RE:SB1213 by Carona (Relating to consumer protections in the purchase of life settlement contracts; imposing penalties.), As Engrossed
TO: Honorable John T. Smithee, Chair, House Committee on Insurance
FROM: John S O'Brien, Director, Legislative Budget Board
IN RE: SB1213 by Carona (Relating to consumer protections in the purchase of life settlement contracts; imposing penalties.), As Engrossed
Honorable John T. Smithee, Chair, House Committee on Insurance
Honorable John T. Smithee, Chair, House Committee on Insurance
John S O'Brien, Director, Legislative Budget Board
John S O'Brien, Director, Legislative Budget Board
SB1213 by Carona (Relating to consumer protections in the purchase of life settlement contracts; imposing penalties.), As Engrossed
SB1213 by Carona (Relating to consumer protections in the purchase of life settlement contracts; imposing penalties.), As Engrossed
Estimated Two-year Net Impact to General Revenue Related Funds for SB1213, As Engrossed: a positive impact of $52,500 through the biennium ending August 31, 2013. The bill would make no appropriation but could provide the legal basis for an appropriation of funds to implement the provisions of the bill.
Estimated Two-year Net Impact to General Revenue Related Funds for SB1213, As Engrossed: a positive impact of $52,500 through the biennium ending August 31, 2013.
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 2012 $52,500 2013 $0 2014 $0 2015 $0 2016 $0
2012 $52,500
2013 $0
2014 $0
2015 $0
2016 $0
All Funds, Five-Year Impact: Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromDept Ins Operating Acct36 Probable Savings/(Cost) fromDept Ins Operating Acct36 Probable Revenue Gain/(Loss) fromInsurance Maint Tax Fees8042 2012 $52,500 $53,600 ($53,600) $196,537 2013 $0 $0 $0 $232,486 2014 $0 $0 $0 $232,486 2015 $0 $0 $0 $232,486 2016 $0 $0 $0 $232,486 Fiscal Year Probable Savings/(Cost) fromInsurance Maint Tax Fees8042 Change in Number of State Employees from FY 2011 2012 ($196,537) 3.0 2013 ($232,486) 3.0 2014 ($232,486) 3.0 2015 ($232,486) 3.0 2016 ($232,486) 3.0
Fiscal Year Probable Revenue Gain/(Loss) fromGeneral Revenue Fund1 Probable Revenue Gain/(Loss) fromDept Ins Operating Acct36 Probable Savings/(Cost) fromDept Ins Operating Acct36 Probable Revenue Gain/(Loss) fromInsurance Maint Tax Fees8042 2012 $52,500 $53,600 ($53,600) $196,537 2013 $0 $0 $0 $232,486 2014 $0 $0 $0 $232,486 2015 $0 $0 $0 $232,486 2016 $0 $0 $0 $232,486
2012 $52,500 $53,600 ($53,600) $196,537
2013 $0 $0 $0 $232,486
2014 $0 $0 $0 $232,486
2015 $0 $0 $0 $232,486
2016 $0 $0 $0 $232,486
Fiscal Year Probable Savings/(Cost) fromInsurance Maint Tax Fees8042 Change in Number of State Employees from FY 2011 2012 ($196,537) 3.0 2013 ($232,486) 3.0 2014 ($232,486) 3.0 2015 ($232,486) 3.0 2016 ($232,486) 3.0
2012 ($196,537) 3.0
2013 ($232,486) 3.0
2014 ($232,486) 3.0
2015 ($232,486) 3.0
2016 ($232,486) 3.0
Fiscal Analysis
The bill would amend the Insurance Code relating to consumer protections in the purchase of life settlement contracts and imposing penalties. The bill would require the Texas Department of Insurance (TDI) to review antifraud plans that will be filed with the Commissioner and make recommendations on those plans. The bill would authorize TDI to investigate a suspected fraudulent life settlement act, investigate a person engaged in the business of life settlements, and imposes criminal and administrative sanctions for violations. The bill would require persons and entities to file suspected fraud reports to TDI to process and investigate any crimes or violations. The bill would require TDI to investigate the potential criminal violation and prepare the case for criminal prosecution if needed. The bill would authorize TDI to conduct examinations of entities involved in the viatical settlement business. This bill would take effect on September 1, 2011.
Methodology
Based on the analysis provided by TDI, implementation of the bill would expand the duties and increase the workload of TDIs fraud unit and financial examination division. The agency indicates that implementation of this bill would require 2.0 additional full-time-equivalent positions (FTEs) in the fraud unit and 1.0 additional FTEs in the financial division. Each year the 3.0 FTEs would cost $166,206 in salaries and wages, $46,305 in benefit costs, $13,300 in travel, $5,850 for telephones and consumables, and $825 in other operating expenses. One-time equipment and other operating expenses expenditures are anticipated to be $17,651 in fiscal year 2012. Based on the information provided by TDI, this analysis assumes that implementation of the bill would result in a one-time revenue gain ($53,600 in fiscal year 2012) in General Revenue-Dedicated Texas Department of Insurance Fund 36 (GR-D Fund 36) from filing fees and a one-time revenue gain ($52,500 in fiscal year 2012) in General Revenue from assessed penalties. It is assumed that the gain to GR-D Fund 36 would partially fund the cost of the FTEs in fiscal year 2012. It is assumed that the remaining cost of the FTEs would be funded from General Revenue Insurance Maintenance Tax and Insurance Department Fees. Since insurance maintenance tax is self-leveling, this analysis assumes that the costs to implement this bill would come from fund balances or the maintenance tax would be set to recover a higher level of revenue.
Based on the analysis provided by TDI, implementation of the bill would expand the duties and increase the workload of TDIs fraud unit and financial examination division. The agency indicates that implementation of this bill would require 2.0 additional full-time-equivalent positions (FTEs) in the fraud unit and 1.0 additional FTEs in the financial division. Each year the 3.0 FTEs would cost $166,206 in salaries and wages, $46,305 in benefit costs, $13,300 in travel, $5,850 for telephones and consumables, and $825 in other operating expenses. One-time equipment and other operating expenses expenditures are anticipated to be $17,651 in fiscal year 2012. Based on the information provided by TDI, this analysis assumes that implementation of the bill would result in a one-time revenue gain ($53,600 in fiscal year 2012) in General Revenue-Dedicated Texas Department of Insurance Fund 36 (GR-D Fund 36) from filing fees and a one-time revenue gain ($52,500 in fiscal year 2012) in General Revenue from assessed penalties. It is assumed that the gain to GR-D Fund 36 would partially fund the cost of the FTEs in fiscal year 2012. It is assumed that the remaining cost of the FTEs would be funded from General Revenue Insurance Maintenance Tax and Insurance Department Fees. Since insurance maintenance tax is self-leveling, this analysis assumes that the costs to implement this bill would come from fund balances or the maintenance tax would be set to recover a higher level of revenue.
Technology
The bill is anticipated to have a technology impact of $2,825 in fiscal year 2012.
Local Government Impact
No fiscal implication to units of local government is anticipated.
Source Agencies: 454 Department of Insurance
454 Department of Insurance
LBB Staff: JOB, KJG, MW, CH
JOB, KJG, MW, CH