TITLE: CONCERNING THE ELIMINATION OF THE REQUIREMENT THAT APPOINTMENTS OF INSURANCE PRODUCERS BY INSURANCE COMPANIES BE FILED WITH THE COMMISSIONER OF INSURANCE, AND, IN CONNECTION THEREWITH, REQUIRING INSURERS TO MAINTAIN A CURRENT LIST OF AUTHORIZED AGENTS AND TO MAKE SUCH LIST AVAILABLE TO THE COMMISSIONER FOR INVESTIGATION AND ENFORCEMENT PURPOSES.

Fiscal Impact Summary	FY 1999/2000	FY 2000/2001
State Revenues Cash Fund	-$2,352,000	-$2,250,500
State Expenditures Cash Fund
FTE Position Change	0.0 FTE	0.0 FTE
Other State Impact: TABOR
Effective Date: Effective January 1, 2000, unless a referendum petition is fileds and approved
Appropriation Summary for FY 1999-2000: None required
Local Government Impact: None identified

This statement of fiscal impact is revised to reflect new estimates of the amount of appointment revenue that the Division of Insurance projects to receive in the next two fiscal years.

The bill eliminates the statutory provisions that requireing that formal appointments of insurance producers (sales agents) be filed with the Commissioner of Insurance, Division of Insurance, Department of Regulatory Agencies, and that require appointment fees be paid to the division. The bill also replaces those repealed provisions with a requirement that insurers maintain a current list of producers authorized to accept applications on behalf of the insurer and make such list available to the commissioner for investigative and enforcement purposes.

Under current law, by rule of the Division of Insurance, insurance companies pay a 2 year fee of $18 for each of its new producers, $12 for renewing producers, and $12 to terminate a producer. There are approximately 50,000 producers appointed in the state annually. This bill will eliminate appointment fees estimated to generate $2,352,000 in FY 1999-00 and $2,250,500 in FY 2000-01 in fee revenues to the state.

The division is funded by fees it collects and a portion of the premium taxes paid on insurance premiums. Under current statute, the division is entitled to spend up to five percent of the premium taxes collected. The ninety-five percent balance of the premium taxes collected is deposited in the General Fund, together with the premium tax dollars not required to fund the division. For FY 1998/99, the division is allowed to spend up to $5,734,067 from premium tax revenues and is estimated to spend $3,160,830. As the amount of fee revenues decline, the amount of premium tax dollars required to fund the division will increase, resulting in fewer premium tax dollars spilling over to the General Fund.

The appointments of insurance producers, as well as other administrative and record keeping functions, is administered for the division by a private contractor. The fees are paid directly by insurance companies to the private firm. The firm retains money to cover the costs of administration, as per their contract with the division, and remits the balance to the division. The division is currently in the process of preparing a new request for proposal for contract for services beginning January 1, 2000. As a result of this bill, it is expected that the cost of the contract would be lower reflecting the elimination of the formal appointment provisions. As such, it would affect the amount of money earned and retained by the contractor, but would not affect the expenditures of the state.

This fiscal note implies that the appropriation to the Division of Insurance, Department of Regulatory Agencies, should not be changed as the result of this bill.