COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 3785-02
Bill No.: Truly Agreed To and Finally Passed SCS for SB 1188
Subject: Banks and Financial Institutions; Contracts and Contractors; Insurance - General
Type: Original
Date: May 18, 2004
FISCAL SUMMARY
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on General Revenue Fund |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Dedicated Insurance Fund | $0 to $17,500 | $0 | $0 |
| Total Estimated
Net Effect on Other State Funds |
$0 to $17,500 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2005 | FY 2006 | FY 2007 |
| Local Government | $0 | $0 | $0 |
ASSUMPTION
Officials from the Department of Economic Development - Division of Finance and Division of Credit Unions and the Office of Secretary of State indicate this proposal will have no fiscal impact on their agencies.
Officials from the Public School and Non-Teacher School Employee Retirement Systems of Missouri and the Missouri State Employees Retirement System state this proposal will not affect their systems.
Officials from the State of Missouri Joint Committee on Public Employee Retirement indicated that this proposal would not create a "substantial proposed change" in future plan benefits as defined in Section 105.660 (5). Therefore, no actuarial cost statement is required for this proposal.
In response to the introduced version of this proposal, the Highway and Transportation Employees' and Highway Patrol Retirement System stated this proposal would not affect their system.
Officials from the Department of Insurance (INS) assume that if each licensed insurer issuing individual annuity contracts in Missouri (350) files an amendment to modify their current contracts to comply with the proposed changes it will generate $17,500( 350 x $50 filing fee).
ASSUMPTION (continued)
Since the proposal allows but does not require a dynamic interest rate that varies based on an external index, the number of insurers that will actually elect to amend their contracts is
unknown. INS estimates a range in form filing fee revenue of $0-$17,500 which would be deposited into the Insurance Dedicated Fund.
This proposal would increase Total State Revenue
| FISCAL IMPACT - State Government | FY 2005 | FY 2006 | FY 2007 |
| DEDICATED INSURANCE FUND | |||
| Income - Filing Fees | $0 to $17,500 | $0 | $0 |
| ESTIMATED NET EFFECT ON DEDICATED INSURANCE FUND |
$0 to $17,500 |
$0 |
$0 |
| FISCAL IMPACT - Local Government | FY 2005 | FY 2006 | FY 2007 |
| $0 | $0 | $0 |
FISCAL IMPACT - Small Business
Any small business issuing individual annuity contracts could have a direct fiscal impact as a result of this proposal due to filing fees incurred.
DESCRIPTION
This proposal amends the formula that may be used for determining the minimum present value of an annuity when it is terminated early. Current law requires these contracts to offer a minimum interest rate of 3%. This proposal removes this minimum and allows these contracts to offer a rate that is tied to the five-year Constant Maturity Treasury Rate, as reported by the Federal Reserve. The proposal permits sellers of annuities to continue to use the current formula until July 1, 2006.
The current law is set to expire on July 1, 2004.
This proposal has an emergency clause.
DESCRIPTION (continued)
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Economic Development
Division of Finance
Division of Credit Unions
Department of Insurance
Public School Retirement System of Missouri
Joint Committee on Public Employee Retirement
Highway and Transportation Employees' and Highway Patrol Retirement System
Office of Secretary of State
Missouri State Employees Retirement System
Mickey Wilson, CPA
Director
May 18, 2004