This Fiscal Note is not an official copy and should not be quoted or cited.
This Fiscal Note is not an official copy and should not be quoted or cited.
Fiscal Note - SB 0468 - Establishes MO Earthquake Catastrophe Fund to reimburse property insurers for losses incurred in an earthquake
COMMITTEE ON LEGISLATIVE RESEARCH
OVERSIGHT DIVISION
FISCAL NOTE
L.R. NO. 2025-01
BILL NO. SB 468
SUBJECT: Health Care
TYPE: Original
FISCAL SUMMARY
ESTIMATED NET EFFECT ON STATE FUNDS Net Effect on All State Funds* *Costs and revenue expected to exceed $100,000 and will net to zero. ESTIMATED NET EFFECT ON FEDERAL FUNDS Net Effect on All Federal Funds
FUND AFFECTED
FY 2000
FY 2001
FY 2002 Missouri Earthquake
Catastrophe Fund
$0
$0
$0
Total Estimated
$0
$0
$0
FUND AFFECTED
FY 2000
FY 2001
FY 2002 None
Total Estimated
$0
$0
$0
|
ESTIMATED NET EFFECT ON LOCAL FUNDS | |||
| FUND AFFECTED | FY 2000 | FY 2001 | FY 2002 |
| Local Government | $0 | $0 | $0 |
Numbers within parentheses: ( ) indicate costs or losses
This fiscal note contains 4 pages.
FISCAL ANALYSIS
ASSUMPTION
The Department of Revenue, Office of Administration, and Cities of West Plaines, Mexico, and Poplar Bluff assume this proposal would not fiscally impact their agencies.
The Department of Insurance (INS) states this proposal is unlike any activity the Department currently does. It is similar to the auto JUA Plan or the property insurance FAIR Plan, which are administered by separate entities on behalf of insurers, with oversight by INS. INS proposes bidding out the responsibility for administering the fund. The drafting of bid specifications and initial bid review process would require approximately six months total time of various department staff (legal counsel, actuary, division directors, etc..). The cost of bidding out administration of the fund can be absorbed with current appropriations and staff. Any consults needed in this process would be paid from the fund. Basic services to be bid out would include actuarial expertise, fund administration, fund investment, revenue bond oversight, and claims review. Information system costs would also have to be included in the bid specifications. INS cannot project what the cost of administering the fund would be, but premiums would be set to ensure the cost of administering the fund is covered.
Oversight notes that the provisions of the proposal which allow INS to enter into contracts with counties and municipalities for the issuance of revenue bonds could have fiscal impact on local governments. For purposes of this fiscal note Oversight assumes proceeds of the bonds would be used to meet reimbursement obligations of the Missouri Earthquake Catastrophe Fund.
| FISCAL IMPACT - State Government | FY 2000 | FY 2001 | FY 2002 |
| (10 Mo.) | |||
| MISSOURI EARTHQUAKE | |||
| CATASTROPHE FUND | |||
| Revenue - Department of Insurance | |||
| Increase in premiums to cover | |||
| the costs of the fund | Unknown | Unknown | Unknown |
| Costs - Department of Insurance | |||
| Costs to administer the fund | (Unknown) | (Unknown) | (Unknown) |
|
ESTIMATED NET EFFECT ON |
|||
| MISSOURI EARTHQUAKE | |||
| CATASTROPHE FUND* | $0 | $0 | $0 |
| *Costs and revenues are expected to exceed $100,000 annually. | |||
| FISCAL IMPACT - Local Government | FY 2000 | FY 2001 | FY 2002 |
| (10 Mo.) | |||
| CITIES AND COUNTIES | |||
| Income - Bond Revenues | $0 | $0 | $0 |
| or | or | ||
| Unknown | Unknown | ||
| Cost - Reimbursement Obligations | $0 | $0 | $0 |
| or | or | ||
| (Unknown) | (Unknown) | ||
| NET EFFECT ON CITIES | |||
| AND COUNTIES | $0 | $0 | $0 |
| FISCAL IMPACT - Small Business | |||
| Small businesses may be fiscally impact due to an increase in premiums in order to receive coverage under the Missouri Earthquake Catastrophe Fund. | |||
DESCRIPTION
This proposal creates the Missouri Earthquake Catastrophe Fund. Under the fund, insurance companies will enter into reimbursement contracts with the Department of Insurance in which
it will compensate the insurer for losses incurred in an earthquake. The insurance companies will be required to pay a reimbursement premium to the Department of Insurance in order to
receive coverage under the fund.
If the fund is insufficient to pay claims, the Department of Insurance may enter into agreements with local governments for the issuance of revenue bonds. The bonds will be issued for the
purpose of meeting the reimbursement obligations of the fund. If the premiums paid by the insurance companies are not sufficient to pay off the bonds, the Department may levy an emergency assessment on the insurance companies in order to pay the bonds off. If the insurer becomes insolvent, the fund will pay the insurer's claim to the Missouri Property and Casualty Insurance Guarantee Association for the benefit of the defunct's policyholders.
Under the proposal, the Department of Insurance will appoint an advisory council to provide it information regarding the issue of earthquakes and related topics. If a federal or multistate earthquake fund is created, the Department of Insurance will recommend to the general assembly DESCRIPTION (continued)
whether to terminate the Missouri fund or take other appropriate action.
This legislation is not federally mandated, would not duplicate any other program and would not require additional capital improvements or rental space.
SOURCES OF INFORMATION
Department of Insurance
Department of Revenue
Office of Administration
City of Poplar Bluff
City of Mexico
City of West Plaines
NOT RESPONDING: State Emergency Management System, Cities of St. Louis, Kansas City, and Springfield, Boone County, Jackson County, Greene County, and St. Louis County
Jeanne Jarrett, CPA
Director
March 3, 1999