Date Requested: March 09, 2017
Time Requested: 11:39 AM
Agency: Insurance Commission
CBD Number: Version: Bill Number: Resolution Number:
2834 Introduced SB555
CBD Subject: Insurance



Sources of Revenue:

Special Fund

Legislation creates:

Neither Program nor Fund

Fiscal Note Summary

Effect this measure will have on costs and revenues of state government.

    Senate Bill 555, if enacted, would privatize the Public Employees Insurance Agency by creating an employer owned mutual insurance company and transferring certain responsibilities, both regulatory and fiscal, to the Insurance Commissioner.
    It is unknown at this time what the fiscal impact to the Offices of the Insurance Commissioner would be.

Fiscal Note Detail

Effect of Proposal Fiscal Year
Fiscal Year
(Upon Full
1. Estmated Total Cost 0 0 0
Personal Services 0 0 0
Current Expenses 0 0 0
Repairs and Alterations 0 0 0
Assets 0 0 0
Other 0 0 0
2. Estimated Total Revenues 0 0 0

Explanation of above estimates (including long-range effect):



    Senate Bill 555, if enacted, would have fiscal impact on the Offices of the Insurance Commissioner and could potentially increase operating costs in several categories including, but not limited to, personnel costs, office expenses, and professional and contractual expenses.
    It is not possible at this time to quantify the increase in expenses, and additional clarification is needed in order to properly estimate the increased costs.
    Clarification and interpretation of these specific sections of SB555 would be helpful in preparing an estimate:
    §15-16A-2(23)"New Fund Liabilities" - are defined as "claims payment obligations (indemnity and medical expenses) for all claims, actual and incurred but not reported, for any claims with a date of injury or last exposure on or after July 1, 2018." Generally, health insurance claim coverage is determined by the date of the medical service provided, not be the date of injury or exposure. Clarification is also needed with regard to what indemnity is to be paid, as health insurance benefits do not generally pay indemnity benefits.
    §15-16A-2 (25)"Old Fund Liabilities" - are defined as "all claims payment obligations (indemnity and medical) related liabilities and appropriate administrative expenses necessary for the administration of all claims, actual and incurred but not reported, for any claims with a date of injury or last exposure on or before June 30, 2018". Again, health insurance benefit coverage is generally driven by the presence of insurance coverage on the date of service that health care benefits were delivered, as opposed to the date that the sickness, injury, or exposure occurred. Clarification as to what indemnity benefits are being referred to is also necessary.
    §5-16A-4 (3) refers to the "current subscribers to the Workers' Compensation Fund". This appears to be a technical defect in the bill, as the Workers' Compensation Fund no longer exists.
    Clarification is needed to delineate the duties of the Insurance Commissioner from the Public Employees Mutual Insurance Company and the from the Public Employees Insurance Council. This clarification is critical in order to prepare a budget estimate.
    §5-16A-8 (c) provides that the Director shall have sole authority to identify and select employees that are employed by the agency to be assigned and transferred to the Insurance Commissioner. The duties that the selected employees are intended to perform after transfer to the Insurance Commissioner is unclear.
    Additional clarification is also needed with regard to the purpose, custody and control of monetary and other assets.

    Person submitting Fiscal Note: Melinda Ashworth Kiss
    Email Address: