COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. No.: 1899-01
Bill No.: SB 484
Subject: Insurance - Medical; Health Care
Type: Original
Date: February 23, 2001
FISCAL SUMMARY
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| General Revenue | ($351,863) | ($703,727) | ($1,055,591) |
| County Foreign Insurance | $0 | $0 | |
| Total Estimated
Net Effect on All State Funds |
($351,863) | ($703,727) | ($1,055,591) |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| None | |||
| Total Estimated
Net Effect on All Federal Funds |
$0 | $0 | $0 |
| FUND AFFECTED | FY 2002 | FY 2003 | FY 2004 |
| Local Government | ($351,863) | ($703,727) | ($1,055,591) |
Numbers within parentheses: ( ) indicate costs or losses.
This fiscal note contains 4 pages.
ASSUMPTION
Department of Insurance (INS) officials state the department's operations and responsibilities would not be affected by the proposal only the operations of the Missouri Property and Casualty Insurance Guaranty Association (MOCIGA). INS states an increase in payments by the MPCIGA for losses would decrease state revenues. INS states the MPCIGA recovers its losses by assessing its member insurers. The member insurers are allowed a tax credit against premium tax for 1/3 of each assessment in each of the three years following the year of assessment. INS states the mean annual assessment for bodily injury claims from 1996-1998 is calculated at $2,814,910. Legislation caps any increase in bodily injury claims by the applicable policy limits. INS estimates that half the amount of claims payments would be unaffected because they are already paid out at policy limits. INS states the other half would increase by the factor of 2.5. INS states the result of these two assumptions is an overall increase by a factor of 1.75 for the bodily injury claim assessment. INS states the mean annual assessment of $2,814,910 multiplied by 1.75 produces a mean annual assessment for bodily injury claims of $4,926,092 which is an increase of $2,111,182 which could potentially be taken against future premium taxes if the insurer's tax liability would be sufficient to claim the full credit.
Oversight assumes that 1/3 of the assessment will be claimed each year plus any carryover from previous years assessments. Oversight also assumes that insurance companies would have sufficient premium tax to offset the yearly claim for assessments.
| FISCAL IMPACT - State Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| GENERAL REVENUE FUND | |||
| Loss - Department of Insurance | |||
| Reduction in premium taxes | ($351,863) | ($703,727) | ($1,055,591) |
| ESTIMATED NET EFFECT ON GENERAL REVENUE FUND |
($351,863) |
($703,727) |
($1,055,591) |
| COUNTY FOREIGN INSURANCE FUND | |||
| Savings - Department of Insurance | |||
| Distributions to local political subdivisions |
$351,863 |
$703,727 |
$1,055,591 |
| Loss - Department of Insurance | |||
| Reduction in premium taxes | ($351,863) | ($703,727) | ($1,055,591) |
| ESTIMATED NET EFFECT ON COUNTY FOREIGN INSURANCE FUND |
$0 |
$0 |
$0 |
| FISCAL IMPACT - Local Government | FY 2002
(10 Mo.) |
FY 2003 | FY 2004 |
| LOCAL POLITICAL SUBDIVISIONS | |||
| Loss - Local Political Subdivisions | |||
| Decrease in premium tax distributions | ($351,863) | ($703,727) | ($1,055,591) |
| ESTIMATED NET EFFECT ON LOCAL POLITICAL SUBDIVISIONS |
($351,863) |
($703,727) |
($1,055,591) |
FISCAL IMPACT - Small Business
No direct fiscal impact to small businesses would be expected as a result of this proposal.
DESCRIPTION
This proposal would broaden the categories of expenses an insured claimant may receive from the Missouri Property and Casualty Insurance Guaranty Association on claims arising from
bodily injury, sickness, or disease. All property and casualty insurers doing business in the state would be members of the association, which covers any insurance claims made against an
insurer that has become insolvent. Under this proposal, an insured claimant may recover for loss of wages. The association would only be responsible up to the face amount or limits of the
DESCRIPTION (continued)
policies allows such claimants to be awarded up to two-and-a-half times the cost of their reasonable medical expenses and loss of earnings, up to their insurance policy limits.
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
Jeanne Jarrett, CPA
Director
February 23, 2001