Fiscal Note - Office of Insurance Commissioner, 5010 SB Credit score/insurance rates (01/08/2021)
Summary
Individual State Agency Fiscal Note from the Office of Insurance Commissioner for 5010 SB, titled "Credit score/insurance rates", Request # 21-03-1, with agency preparation dated 01/08/2021. The note states that Section 4(2) removes the exception allowing insurers to use credit history to determine personal insurance rates, premiums, or eligibility for coverage, applying to policies issued or renewed on or after January 1, 2023. It estimates that a total of 200 application form filings and 200 rate filings will be submitted in FY2023 by insurers to remove credit from their rating plans. Part I lists operating expenditures from the Insurance Commissioners Regulatory Account of 11,304 in FY 2022 and 77,541 in FY 2023.
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“Fiscal Note - Office of Insurance Commissioner, 5010 SB Credit score/insurance rates (01/08/2021).”
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Individual State Agency Fiscal Note
Bill Number: 5010 SB Title: Credit score/insurance rates Agency: 160-Office of Insurance
Commissioner
Part I: Estimates
No Fiscal Impact
Estimated Cash Receipts to:
NONE
Estimated Operating Expenditures from:
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.1 0.5 0.3 0.0 0.0
Account
Insurance Commissioners Regulatory 11,304 77,541 88,845 0 0
Account-State 138-1
Total $ 11,304 77,541 88,845 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.
X Requires new rule making, complete Part V.
Legislative Contact: Kellee Gunn Phone: 786-7429 Date: 01/07/2021
Agency Preparation: Bryon Welch Phone: 360-725-7037 Date: 01/08/2021
Agency Approval: Bryon Welch Phone: 360-725-7037 Date: 01/08/2021
OFM Review: Jason Brown Phone: (360) 902-0539 Date: 01/11/2021
Form FN (Rev 1/00) 161,678.00 Request # 21-03-1
FNS063 Individual State Agency Fiscal Note 1 Bill # 5010 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(2) removes the exception that allows insurers to use credit history to determine personal insurance
rates, premiums, or eligibility for coverage as long as the insurance scoring models and all rates and rating plans
for that line of coverage are filed with the Office of Insurance Commissioner (OIC). This section applies to all
personal insurance policies issued or renewed on or after January 1, 2023.
Section 5(2) requires that prior to January 1, 2023, if an insurer’s filed rates and rating rules for personal
insurance use credit history, the insurer must submit a filing to remove the use of credit from its rates and rating
rules.
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.
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(2) removes the exception that allows insurers to use credit history to determine personal insurance
rates, premiums, or eligibility for coverage as long as the insurance scoring models and all rates and rating plans
for that line of coverage are filed with the Office of Insurance Commissioner (OIC). This section applies to all
personal insurance policies issued or renewed on or after January 1, 2023.
Section 5(2) requires that prior to January 1, 2023, if an insurer’s filed rates and rating rules for personal
insurance use credit history, the insurer must submit a filing to remove the use of credit from its rates and rating
rules.
Based on the credit history related insurance scoring models, and rates and rating plans, the Office of Insurance
Commissioner (OIC) receives each year, it is estimated that a total of 200 application form filings and 200 rate
filings will be submitted in FY2023 by insurers in order to remove credit from their rating plans and refine their
non-credit rating plans to adjust to the new market. Each application form filing requires 1.5 hours of staff time
for review. For rate filings, most insurers will want to overhaul their remaining rating factors to optimize for the
post-credit environment; these filings will be difficult, complex filings. Others will take a more straightforward
approach, simply removing credit and leaving the remainder of their rating plans unchanged. The OIC assumes
the new rate filings will average 5 hours each. However, because time spent on the new rate filings will be
partially offset, since the filings will replace other regular filings some of the insurers would have otherwise
submitted, the additional required staff time is reduced by 2 hours per rate filing for a total of 3 hours of staff
time per new rate filing.
In FY2023, one-time costs of 1.5 hours of review time per application form filing, or a total of 300 hours (1.5
hours per filing x 200 application form filings), of a Functional Program Analyst 4 (100 hours) and a Functional
Program Analyst 3 (200 hours); and one-time costs of 3 hours of review time per rate filing, or a total of 600
hours (3 hours per filing x 200 rate filings), of an Actuary 2 (200 hours), Actuarial Analyst 3 (200 hours) and
Actuarial Analyst 2 (200 hours) will be required.
Credit score/insurance rates 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 161,678.00 Request # 21-03-1
FNS063 Individual State Agency Fiscal Note 2 Bill # 5010 SB
Part III: Expenditure Detail
III. A - Operating Budget Expenditures
Account Account Title Type FY 2022 FY 2023 2021-23 2023-25 2025-27
138-1 Insurance State 11,304 77,541 88,845 0 0
Commissioners
Regulatory Account
Total $ 11,304 77,541 88,845 0 0
III. B - Expenditures by Object Or Purpose
FY 2022 FY 2023 2021-23 2023-25 2025-27
FTE Staff Years 0.1 0.5 0.3
A-Salaries and Wages 6,719 45,983 52,702
B-Employee Benefits 2,324 16,050 18,374
C-Professional Service Contracts
E-Goods and Other Services 2,261 15,508 17,769
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 $ 11,304 77,541 88,845 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
Job Classification Salary FY 2022 FY 2023 2021-23 2023-25 2025-27
Actuarial Analyst 2 64,332 0.1 0.1
Actuarial Analyst 3 86,484 0.1 0.1
Actuary 2 122,220 0.1 0.1
Functional Program Analyst 3 70,956 0.1 0.1
Functional Program Analyst 4 78,408 0.0 0.1 0.1
Senior Policy Analyst 91,896 0.1 0.0
Total FTEs 0.1 0.5 0.3 0.0
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
IV. C - Capital Budget Breakout
Identify acquisition and construction costs not reflected elsewhere on the fiscal note and describe potential financing methods
NONE
Credit score/insurance rates 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 161,678.00 Request # 21-03-1
FNS063 Individual State Agency Fiscal Note 3 Bill # 5010 SB
IV. D - Capital FTE Detail: List FTEs by classification and corresponding annual compensation. Totals need to agree with total FTEs in
Part IVB
NONE
Part V: New Rule Making Required
Identify provisions of the measure that require the agency to adopt new administrative rules or repeal/revise existing rules.
Simple rulemaking, in FY2022, is required in order to repeal chapter 284-24A WAC.
Credit score/insurance rates 160-Office of Insurance Commissioner
Form FN (Rev 1/00) 161,678.00 Request # 21-03-1
FNS063 Individual State Agency Fiscal Note 4 Bill # 5010 SB
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