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F I S C A L I M P A C T R E P O R T

SPONSOR Leavell

DATE TYPED 3/18/05

HB

SHORT TITLE Amend New Mexico Insurance Code

SB 983/aHBIC

ANALYST Wilson

APPROPRIATION

Appropriation Contained Estimated Additional Impact Recurring

or Non-Rec

Fund

Affected

FY05

FY06

FY05

FY06

NFI

(Parenthesis ( ) Indicate Expenditure Decreases)

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

($0.1) Recurring

General Fund

SOURCES OF INFORMATION

LFC Files

Responses Received From

Attorney General’s Office (AGO)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of HBIC Amendment

The House Business and Industry Committee amendment clarifies that each taxpayer transacting

health insurance in New Mexico shall pay a health insurance premium surtax of one percent of

the gross health insurance premiums and membership and policy fees received by it on hospital

and medical expense incurred insurance or contracts; nonprofit health care service plan contracts,

excluding dental or vision only contracts; and health maintenance organization subscriber con-

tracts covering health risks within this state during the preceding calendar year, less all return

health insurance premiums, including dividends paid or credited to policyholders or contract

holders and health insurance premiums received for reinsurance on New Mexico risks. Except as

provided in this section, all references in the Insurance Code to the premium tax shall include

Senate Bill 983/aHBIC -- Page 2

both the premium tax and the health insurance premium surtax.

Synopsis of Original Bill

Senate Bill 983

is a cleanup bill addressing various issues in the insurance code. The changes to

current law in the bill are as follows:

•

Permits the superintendent of insurance to rely on electronic versions of filings main-

tained by the National Association of Insurance Commissioners (NAIC) in lieu of paper

filings made with the superintendent as long as they can readily be made available for

public inspection;

•

Clarifies that premium tax is calculated using the numbers reported in the insurance com-

pany's audited annual statement rather than a separately calculated and unaudited value

for premium received;

•

Provides for refund or credit of over payments of fees or taxes, and limits the look back

period for all refunds or credits to three years;

•

Permits a new agent to be paid a commission for any initial policies submitted to an in-

surance company prior to being appointed by the company;

•

Simplifies the procedure for limited licensing of vendors of telecommunication devices

who sell insurance on the equipment;

•

Clarifies that staff adjusters can adjust claims for all insurance companies within a group

of insurance companies under common ownership commonly known as affiliated compa-

nies;

•

Eliminates the requirement that an adjuster maintain an office in this state. This does not

affect the specific requirement for in-state adjusters for workers compensation claims;

•

Applies the Insurance Holding Company Law to prepaid dental plans; and

•

Removes cash from the list of acceptable deposits for service contract providers.

Significant Issues

The PRC states that the removal of ambiguous or unnecessary provisions of the insurance code

will ease administration of the insurance code. They also believe the bill clarifies existing law

and makes it easier to administer the insurance code without compromising consumer protec-

tions. In fact, the PRC indicates this bill will strengthens consumer protection.

The bill allows a new agent to be paid a commission for any initial policies submitted to an in-

surance company prior to being appointed by the company. This fixes a problem arising from

recent changes in the law that allowed agents to submit applications to a company within 15 days

prior to being appointed by the company.

Senate Bill 983/aHBIC -- Page 3

The bill will enable improved monitoring of the financial condition of prepaid dental plans.

FISCAL IMPLICATIONS

There will be a $25 penalty for dishonored checks or electronic payments. The revenues received

will be insignificant.

ADMINISTRATIVE IMPLICATIONS

The PRC states that the provisions of this bill will improve the efficiency of the insurance divi-

sion.

TECHNICAL ISSUES

The AGO suggests that the amendments to Section 59A-6-2B on page 5, lines 17 and 18, be re-

written to clarify their intent. They also suggest that the reference to “Schedule T” be omitted

and that the reference to Section 59A-11-10 in section 5 of the bill be clarified as to its intent.

DW/lg:yr