COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO.: 4397-02
BILL NO.: SB 1019
SUBJECT: Credit and Bankruptcy; Insurance - General; Insurance Department
TYPE: Original
DATE: March 13, 2000
FISCAL SUMMARY
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| General Revenue | (Unknown) | (Unknown) | (Unknown) |
| County Foreign Insurance | $0 | $0 | $0 |
| Total Estimated
Net Effect on All State Funds |
(UNKNOWN) | (UNKNOWN) | (UNKNOWN) |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2001 | FY 2002 | FY 2003 |
| Local Government | (UNKNOWN) | (UNKNOWN) | (UNKNOWN) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
ASSUMPTION
Officials from the Office of State Courts Administrator assume this proposal would not fiscally impact their agency
Office of State Auditor (SAU) officials state the proposal states the state auditor "may" perform an audit. In addition, if an audit is conducted, there are no provisions for payment of costs for the audit. SAU states that since it is unclear how many audits would be conducted, whether audits would be conducted at all, and if conducted who would pay for the costs of the audit, the fiscal impact of this proposal is unknown.
Officials from the Department of Insurance (INS) state that it is likely that administrative costs for receiverships would increase as a result of this proposal. INS states this would result in increased assessments to the Guaranty Association and therefore a decrease in premium taxes collected as a result of credits taken by insurers for the Guaranty Association assessments. INS states the fiscal impact of this proposal in unknown.
Office of Attorney General officials did not respond to our fiscal impact request.
| FISCAL IMPACT - State Government | FY 2001
(10 Mo.) |
FY 2002 | FY 2003 |
| GENERAL REVENUE FUND | |||
| Loss - Department of Insurance | |||
| Reduced premium taxes | (Unknown) | (Unknown) | (Unknown) |
| Costs - Office of State Auditor | |||
| Auditing costs | (Unknown) | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON GENERAL REVENUE FUND |
(UNKNOWN) |
(UNKNOWN) |
(UNKNOWN) |
| COUNTY FOREIGN INSURANCE FUND | |||
| Savings - Department of Insurance | |||
| Reduction in distributions | Unknown | Unknown | Unknown |
| Loss - Department of Insurance | |||
| Reduction in premium taxes | (Unknown) | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON COUNTY FOREIGN INSURANCE FUND |
$0 |
$0 |
$0 |
| FISCAL IMPACT - Local Government | FY 2001
(10 Mo.) |
FY 2002 | FY 2003 |
| LOCAL POLITICAL SUBDIVISIONS | |||
| Loss - Local Political Subdivisions | |||
| Reduction in distributions | (Unknown) | (Unknown) | (Unknown) |
| ESTIMATED NET EFFECT ON LOCAL POLITICAL SUBDIVISIONS |
(UNKNOWN) |
(UNKNOWN) |
(UNKNOWN) |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal would revise the powers and duties of the rehabilitator and liquidator in insurance company insolvency proceedings. The Director may hire employees to assist him in his duties as rehabilitator but no employee hired would be related within the second degree by blood or marriage to the rehabilitator, the special duty rehabilitator, or to any law firm or consulting firm receiving fees from the insurer's assets. The liquidator's employees, legal counsel and other personnel would not be related within the first degree by blood or marriage to the liquidator, DESCRIPTION (continued)
special duty liquidator, or any law firm or other persons receiving fees from the insurer's assets. The attorney who serves as a special duty rehabilitator may not serve as counsel to the rehabilitator or to the company undergoing rehabilitation. The rehabilitator may pursue all
appropriate legal remedies, upon court approval, if it appears that there has been criminal or tortious conduct committed. The court would not approve the pursuit of legal remedies by the
rehabilitator unless it finds that the costs and benefits of such investigation would exceed its costs. The court may impose conditions on the rehabilitator's pursuit of legal remedies to
conserve the insurer's estate.
Only the Attorney General may appear in behalf of the rehabilitator and liquidator in the court of appeals or the supreme court.
The State Auditor would audit the rehabilitator's and liquidator's accounts annually.
A special deputy would not serve in the rehabilitation of an insurance company if he or she
represented that insurer before.
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 Insurance
Office of State Auditor
Office of State Courts Administrator
NOT RESPONDING: Office of Attorney General
Jeanne Jarrett, CPA
Director
March 13, 2000