Multiple Agency Fiscal Note Summary — 6331 SB: Captive insurers
Summary
A Multiple Agency Fiscal Note Summary for Bill Number 6331 SB, titled Captive insurers, with a final date published of February 5, 2020, followed by individual fiscal notes. The summary table lists estimated cash receipts for the Office of Insurance Commissioner of 1,480,000 for 2019-21, 3,150,000 for 2021-23 and 3,165,000 for 2023-25. It lists estimated operating expenditures of 35,530 for the Office of Insurance Commissioner in 2019-21. The Department of Revenue note marks No Fiscal Impact.
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“Multiple Agency Fiscal Note Summary — 6331 SB: Captive insurers.”
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Multiple Agency Fiscal Note Summary
Bill Number: 6331 SB Title: Captive insurers
Estimated Cash Receipts
Agency Name 2019-21 2021-23 2023-25
GF- State Total GF- State Total GF- State Total
Office of Insurance Commissioner 1,480,000 1,480,000 3,150,000 3,150,000 3,165,000 3,165,000
Total $ 1,480,000 1,480,000 3,150,000 3,150,000 3,165,000 3,165,000
Estimated Operating Expenditures
Agency Name 2019-21 2021-23 2023-25
FTEs GF-State Total FTEs GF-State Total FTEs GF-State Total
Department of Revenue .0 0 0 .0 0 0 .0 0 0
Office of Insurance .0 0 35,530 .0 0 0 .0 0 0
Commissioner
Total $ 0.0 0 35,530 0.0 0 0 0.0 0 0
Estimated Capital Budget Expenditures
Agency Name 2019-21 2021-23 2023-25
FTEs Bonds Total FTEs Bonds Total FTEs Bonds Total
Department of Revenue .0 0 0 .0 0 0 .0 0 0
Office of Insurance .0 0 0 .0 0 0 .0 0 0
Commissioner
Total $ 0.0 0 0 0.0 0 0 0.0 0 0
Estimated Capital Budget Breakout
NONE
Prepared by: Jason Brown, OFM Phone: Date Published:
(360) 902-0539 Final 2/ 5/2020
FNPID: 59556
FNS029 Multi Agency rollup
Department of Revenue Fiscal Note
Bill Number: 6331 SB Title: Captive insurers Agency: 140-Department of
Revenue
Part I: Estimates
X No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Expenditures from:
NONE
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
X Capital budget impact, complete Part IV.
Requires new rule making, complete Part V.
Legislative Contact: Kellee Gunn Phone: 786-7429 Date: 01/15/2020
Agency Preparation: Tyler McLeod Phone: 360-534-1531 Date: 01/21/2020
Agency Approval: Don Gutmann Phone: 360-534-1510 Date: 01/21/2020
OFM Review: Ramona Nabors Phone: (360) 902-0547 Date: 01/29/2020
Request # 6331-1-1
Form FN (Rev 1/00) 155,735.00 1 Bill # 6331 SB
FNS062 Department of Revenue Fiscal Note
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe, by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
This bill extends the business and occupation tax exemption in RCW 82.04.320 to Washington captive insurers.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
This legislation results in no revenue impact to taxes administered by the Department of Revenue.
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the method
by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time and
ongoing functions.
The Department of Revenue will not incur any costs with the implementation of this legislation.
Part III: Expenditure Detail
III. A - Expenditures by Object Or Purpose
NONE
III. B - Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in Part I
and Part IIIA
NONE
III. C - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
NONE
None.
Part V: New Rule Making Required
Request # 6331-1-1
Form FN (Rev 1/00) 155,735.00 2 Bill # 6331 SB
FNS062 Department of Revenue Fiscal Note
Individual State Agency Fiscal Note
Bill Number: 6331 SB Title: Captive insurers Agency: 160-Office of Insurance
Commissioner
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
ACCOUNT FY 2020 FY 2021 2019-21 2021-23 2023-25
General Fund-State 001-1 1,480,000 1,480,000 3,150,000 3,165,000
Total $ 1,480,000 1,480,000 3,150,000 3,165,000
Estimated Operating Expenditures from:
FY 2020 FY 2021 2019-21 2021-23 2023-25
Account
Insurance Commissioners Regulatory 0 35,530 35,530 0 0
Account-State 138-1
Total $ 0 35,530 35,530 0 0
Estimated Capital Budget Impact:
NONE
The cash receipts and expenditure estimates on this page represent the most likely fiscal impact. Factors impacting the precision of these estimates,
and alternate ranges (if appropriate), are explained in Part II.
Check applicable boxes and follow corresponding instructions:
If fiscal impact is greater than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete entire fiscal note
X
form Parts I-V.
If fiscal impact is less than $50,000 per fiscal year in the current biennium or in subsequent biennia, complete this page only (Part I).
Capital budget impact, complete Part IV.
Requires new rule making, complete Part V.
Legislative Contact: Kellee Gunn Phone: 786-7429 Date: 01/15/2020
Agency Preparation: Scott Bird Phone: (360) 725-7169 Date: 01/20/2020
Agency Approval: Bryon Welch Phone: 360-725-7037 Date: 01/20/2020
OFM Review: Jason Brown Phone: (360) 902-0539 Date: 01/21/2020
Form FN (Rev 1/00) 154,765.00 Request # 20-30-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 6331 SB
Part II: Narrative Explanation
II. A - Brief Description Of What The Measure Does That Has Fiscal Impact
Briefly describe by section number, the significant provisions of the bill, and any related workload or policy assumptions, that have revenue or
expenditure impact on the responding agency.
Section 4(1) requires that, within 120 days after the effective date of this section, a WA captive insurer must
register with the Office of Insurance Commissioner (OIC). Upon a captive furnishing evidence of good standing
in its state of domicile and paying a tax (registration fee) of $2,500, a captive insurer is entitled to receive a
certificate of captive authority as a registered WA captive insurer.
Section 4(2) allows a captive insurer to renew its certificate of captive authority by paying a tax (renewal fee) not
to exceed $2,500 per year.
II. B - Cash receipts Impact
Briefly describe and quantify the cash receipts impact of the legislation on the responding agency, identifying the cash receipts provisions by section
number and when appropriate the detail of the revenue sources. Briefly describe the factual basis of the assumptions and the method by which the
cash receipts impact is derived. Explain how workload assumptions translate into estimates. Distinguish between one time and ongoing functions.
Section 4(1) requires that, within 120 days after the effective date of this section, a WA captive insurer must
register with the Office of Insurance Commissioner (OIC). Upon a captive furnishing evidence of good standing
in its state of domicile and paying a tax (registration fee) of $2,500, a captive insurer is entitled to receive a
certificate of captive authority as a registered WA captive insurer. Section 4(2) allows a captive insurer to renew
its certificate of captive authority by paying a tax (renewal fee) not to exceed $2,500 per year.
While the OIC does not have data concerning the number of companies which may utilize independent
procurement, the Department of Revenue (DOR) for FY2019, has confirmed there were a total of 2,366
companies with gross income greater than $50 million per year paying taxes to DOR. If the OIC takes just 25%
of the (2,366 X 25%), we estimate approximately 592 exempt commercial purchasers will directly procure
insurance beginning in fiscal year (FY) 2021. We estimate an additional 35 (2,366 X 1.5%), exempt commercial
purchasers in FY 2022, an additional 6 (2,366 x .25%) in FY 2023 and then assume the number will hold steady
at 633 every year thereafter.
FY2021: $1,480,000 (592 registrations x $2,500)
FY2022: $1,567,500 (35 registrations and 592 registration renewals x $2,500)
FY2023: $1,582,500 (6 registrations and 627 registration renewals x $2,500)
FY2024 and after: $1,582,500 (633 registration renewals x $2,500)
II. C - Expenditures
Briefly describe the agency expenditures necessary to implement this legislation (or savings resulting from this legislation), identifying by section
number the provisions of the legislation that result in the expenditures (or savings). Briefly describe the factual basis of the assumptions and the
method by which the expenditure impact is derived. Explain how workload assumptions translate into cost estimates. Distinguish between one time
and ongoing functions.
Section 4(1) requires that, within 120 days after the effective date of this section, a WA captive insurer must
register with the Office of Insurance Commissioner (OIC). Upon a captive furnishing evidence of good standing
in its state of domicile and paying a tax (registration fee) of $2,500, a captive insurer is entitled to receive a
certificate of captive authority as a registered WA captive insurer. Section 4(2) allows a captive insurer to renew
its certificate of captive authority by paying a tax (renewal fee) not to exceed $2,500 per year. The OIC will be
Captive insurers 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 154,765.00 Request # 20-30-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 6331 SB
required to make changes to its information technology (IT) systems to enable the agency’s existing
licensing/registration system and online e-commerce portal website to process licenses and renewals online for
captive insurers. The changes to IT systems would include a combination of system configuration changes and
software programming enhancements. The OIC’s IT staff will implement these changes in-house to ensure that
the system changes align with existing IT infrastructure and technical approaches that the OIC uses in its other
online licensing/registration portal systems and e-commerce websites. The cost estimate for the system changes
and new software development is assumed to be a one-time cost and estimated at 336 hours over one month
utilizing five IT staff. The cost estimate is based on half of the cost to implement the Pharmacy Benefit Manager
registration/renewal process, which the agency completed in late 2016.
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2020 FY 2021 2019-21 2021-23 2023-25
138-1 Insurance State 0 35,530 35,530 0 0
Commissioners
Regulatory Account
Total $ 0 35,530 35,530 0 0
III. B - Expenditures by Object Or Purpose
FY 2020 FY 2021 2019-21 2021-23 2023-25
FTE Staff Years
A-Salaries and Wages 21,486 21,486
B-Employee Benefits 6,938 6,938
C-Professional Service Contracts
E-Goods and Other Services 7,106 7,106
G-Travel
J-Capital Outlays
M-Inter Agency/Fund Transfers
N-Grants, Benefits & Client Services
P-Debt Service
S-Interagency Reimbursements
T-Intra-Agency Reimbursements
9-
Total $ 0 35,530 35,530 0 0
III. C - Operating FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part I and Part IIIA
NONE
III. D - Expenditures By Program (optional)
NONE
Part IV: Capital Budget Impact
IV. A - Capital Budget Expenditures
NONE
IV. B - Expenditures by Object Or Purpose
NONE
Captive insurers 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 154,765.00 Request # 20-30-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 6331 SB
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
Part V: New Rule Making Required
Captive insurers 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 154,765.00 Request # 20-30-1
FNS063 Individual State Agency Fiscal Note 4 Bill # 6331 SB
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