FISCAL NOTE



FUND(S):

7166 and 7167

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.


The proposed bill eliminates programming, maintenance and support costs associated with requiring the administrator of the plans to utilize state funds for these market supported systems. The assigned risk plan is funded and underwritten by assigned risk premiums and voluntary market assessments. The elimination of a state fund is estimated to reduce state costs by $50,000 annually for maintenance and support of extra data-feeds and approximately $25,000 to $75,000 for the initial programming required by the state to implement the processes. These estimates do not include any programming, maintenance or support costs necessary by the outside administrators. The total costs of the implementation and maintenance incurred will be passed through to employers in the assigned risk market as a portion of their workers compensation rates. So although not state costs, they are borne by assigned market employers. The revision to the guaranty association is estimated to reduce costs by the same amounts, $50,000 annually and approximately $25,000 to $75,000 for the initial programming. The revision provides that workers’ compensation be administered within the established mechanisms already provided to the “Automobile” and “Other” insurance markets.



Fiscal Note Detail


Effect of Proposal Fiscal Year
2008
Increase/Decrease
(use"-")
2009
Increase/Decrease
(use"-")
Fiscal Year
(Upon Full
Implementation)
1. Estmated Total Cost -100,000 -100,000 -100,000
Personal Services -100,000 -100,000 -100,000
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):


The estimates represent the reduction in costs achieved by the elimination of the requirement that the assigned risk market administrator issue remittances from the state accounts. It is estimated that the initial programming for each separate process will range between $25,000 and $75,000 ($50K to 150K for both, the formatting of the chart above does not allow ranges, so the mean $100K was used). It is also estimated that the daily administration and maintenance of the remittance process will require an FTE for each ($35,000 annual salary + benefits = $47,000 or approximately $100,000 for both).



Memorandum


The assigned risk market is funded by the premiums assessed to the employers of the market and reinsured by assessments to voluntary market participants.



    Person submitting Fiscal Note: Michael D. Riley
    Email Address: Michael.Riley@wvinsurance.gov