Department of insurance-licensure revisions.

11LSO-0057.C1

FISCAL NOTE

	FY 2012	FY 2013	FY 2014
NON-ADMINISTRATIVE IMPACT
Anticipated Revenue Increase:
GENERAL FUND	$312,750	$344,025	$378,428
COUNTY SCHOOL FUND	$25,483	$25,483	$25,483
Anticipated Revenue Decrease:
GENERAL FUND	$520	$520	$520

Source of revenue increase:

The draft bill proposes two sources of revenue increases.  First, the biennial continuation fees for nonresident surplus lines brokers, adjusters and consultants are increased from $100 to $150.   This revenue is deposited in the general fund.  Second, the bill proposes to impose a reinstatement penalty for persons reinstating a license that lapsed for failure to file continuing education.  The proposed reinstatement penalty would be equal to the continuation fee.  Pursuant to the proposed bill, the continuation fee for nonresident adjusters will increase to $150.  All fines and penalties are deposited in the public school fund of the county in which the violation occurred.

Assumptions:

With respect to the continuation fee increase, the calculation is based on the number of licensees as of September 30, 2010, with the anticipated increase of new licensees at 10% per year.  The total number of nonresident adjusters, surplus lines brokers and consultants for 2010 is estimated at 12,510.  With a 10% increase for each license type, the numbers for 2011 and 2012 are 13,761 and 15,137 respectively.  Because the license term is two years, only half of the licensees would renew in each fiscal year reported above.  With a $50 increase in the continuation fee, the calculation is as follows: 12510 divided by 2 (half renew in 2012) times the $50 increase in continuation fees equals the estimated revenue increase of $312,750 (12510 /2 x 50 = 312750).

With respect to the proposed reinstatement penalty, the calculation is based on the average number of licensees who failed to renew a license for not complying with the continuing education requirement.   The average number of resident producers who failed to renew for not being CE compliant in the past three years is 8.  The average number of nonresident adjusters who failed to renew for not being CE compliant in the past three years is 164.  All other license types were compliant with the CE requirement for the past three years.  The Department assumes the trend will continue, although the imposition of a penalty as contemplated by the proposed legislation may reduce the number of individuals who fail to comply.

Source of Revenue Decrease:

The draft bill proposes to eliminate the application fee for consultants.  Currently, the statutes provide for an application fee of $20.

Assumptions:

The average number of new consultant applications for the past 3 years is 26 per year.

Prepared by:   Kelley Shepp, LSO Phone: 777-7881

(Information provided by: Stephanie Bryant McGee, Dept. of Insurance  Phone: 777-6896)