Compendium of Budget Information for the 2009 General Session

Commerce & Workforce Services
Appropriations Subcommittee

Line Item: Insurance Department Administration

Function

Administration manages other programs within the Department and is responsible for budgeting, financial tracking, personnel, actuarial services, and managerial statistics.

Producer Licensing is responsible for the issuance and renewal of licenses to all Utah insurance agents and agencies. Licensees qualify through examination.

Financial Examination Division licenses approximately 1,500 insurance companies in Utah. It also monitors financial strength and solvency. The division is responsible for the financial examination of insurers according to statute. Because not all of the companies are headquartered in Utah, the examiners may spend their time out of state. The Insurance Department is reimbursed by the insurer being examined for all costs incurred during the examination, which includes examiners salaries and benefits. These reimbursements are deposited into the General Fund.

Property and Casualty, Health, and Life Divisions function by line of insurance. These divisions handle telephone and walk-in complaints and inquiries from the public. They review and analyze policy forms and rates filed by insurance companies and assist consumers with complaints about insurance products and companies.

Market Conduct Division investigates and enforces the insurance code violations referred from the insurance industry and other divisions of the department.

Intent Language

Under Section 63-38-8.1 of the Utah Code the Legislature intends that any remaining amount of the appropriation provided by Item 64, Chapter 1, Laws of Utah 2007 not lapse at the close of Fiscal Year 2008. The use of nonlapsing funds is limited to: computer equipment - $120,000; employee training - $10,000.

Insurance is authorized to allow State Fleet Services to purchase one additional fleet vehicle for Insurance Fraud investigations with existing division funds.

Insurance Department is authorized to allow State Fleet Services to purchase up to nine additional fleet vehicles for Insurance Fraud investigations with existing division funds.

Funding Detail

Sources of Finance	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
General Fund	$4,403,200	$4,650,100	$5,319,700	$5,919,900	$6,118,300
General Fund, One-time	$0	$0	$19,900	$0	$63,800
Dedicated Credits Revenue	$2,722,100	$2,759,900	$3,128,400	$3,695,800	$4,519,500
Beginning Nonlapsing	$743,900	$950,100	$1,427,300	$1,695,200	$578,700
Closing Nonlapsing	($950,100)	($1,427,300)	($1,724,800)	($1,861,400)	($487,900)
Lapsing Balance	($33,500)	$0	$0	($52,400)	$0
Total	$6,885,600	$6,932,800	$8,170,500	$9,397,100	$10,792,400

Programs:	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Administration	$4,343,600	$4,717,500	$5,329,700	$6,088,000	$6,033,900
Relative Value Study	$39,400	$25,100	$179,400	$33,000	$92,000
Insurance Fraud Program	$2,065,000	$1,783,300	$2,214,800	$2,662,300	$3,820,600
Captive Insurers	$0	$2,900	$113,200	$243,200	$370,900
Electronic Commerce Fee	$437,600	$404,000	$333,400	$370,600	$475,000
Total	$6,885,600	$6,932,800	$8,170,500	$9,397,100	$10,792,400

Categories of Expenditure	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Personal Services	$4,422,600	$4,611,700	$4,913,100	$5,676,000	$7,688,800
In-State Travel	$9,200	$10,700	$20,800	$34,900	$23,200
Out of State Travel	$70,600	$113,100	$117,700	$149,200	$254,300
Current Expense	$1,858,700	$1,666,200	$1,867,900	$2,265,200	$1,827,300
DP Current Expense	$295,800	$354,600	$1,219,200	$1,239,300	$923,800
DP Capital Outlay	$203,800	$157,500	$28,800	$32,500	$75,000
Capital Outlay	$19,100	$19,000	$0	$0	$0
Other Charges/Pass Thru	$5,800	$0	$3,000	$0	$0
Total	$6,885,600	$6,932,800	$8,170,500	$9,397,100	$10,792,400

Other Indicators	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Budgeted FTE	81.0	80.0	85.0	95.0	95.0
Vehicles	9	9	10	10	10

Subcommittee Table of Contents

Program: Relative Value Study

Function

Under UCA 31A-22-307, the Relative Value Study is to determine the reasonable value of medical expenses. It is funded by a 0.01 percent tax on motor vehicle liability, uninsured motorist, and personal injury protection insurance premiums. Funds are collected by the Tax Commission as Dedicated Credits and are made non-lapsing in the Utah Code. The study is produced by Relative Value Studies, Inc. of Denver. The contract to produce the study is re-bid every three years. The Department charges $10 per copy.

Funding Detail

Sources of Finance	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Dedicated Credits Revenue	$85,000	$91,400	$91,200	$93,500	$92,000
Beginning Nonlapsing	$187,200	$232,800	$299,100	$210,900	$0
Closing Nonlapsing	($232,800)	($299,100)	($210,900)	($271,400)	$0
Total	$39,400	$25,100	$179,400	$33,000	$92,000

Categories of Expenditure	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Out of State Travel	$0	$0	$0	$0	$59,200
Current Expense	$39,400	$25,100	$59,200	$23,500	$32,800
DP Current Expense	$0	$0	$108,100	$9,500	$0
DP Capital Outlay	$0	$0	$12,100	$0	$0
Total	$39,400	$25,100	$179,400	$33,000	$92,000

Subcommittee Table of Contents

Program: Insurance Fraud Program

Function

The 1994 Legislature created the Insurance Fraud Act (UCA 31A-31-101 through 108) and the Department created the Insurance Fraud Division. It conducts criminal investigations and prosecutes insurance fraud violators. Nationwide, insurance fraud is estimated at over $3 billion. The program is funded by assessments made on insurers according to the amount of business they do in Utah:

Funding Detail

Sources of Finance	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
General Fund	$0	$0	$0	$0	$76,000
Dedicated Credits Revenue	$2,187,700	$1,977,300	$2,204,500	$2,831,200	$3,657,400
Beginning Nonlapsing	$58,100	$180,800	$374,800	$343,500	$280,800
Closing Nonlapsing	($180,800)	($374,800)	($364,500)	($512,400)	($193,600)
Total	$2,065,000	$1,783,300	$2,214,800	$2,662,300	$3,820,600

Categories of Expenditure	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Personal Services	$691,500	$657,100	$816,500	$911,200	$2,253,200
In-State Travel	$5,200	$6,400	$12,400	$29,200	$12,900
Out of State Travel	$17,500	$23,600	$36,500	$37,700	$40,000
Current Expense	$1,331,500	$1,065,200	$1,315,800	$1,636,500	$1,480,900
DP Current Expense	$19,300	$31,000	$33,600	$47,700	$33,600
Total	$2,065,000	$1,783,300	$2,214,800	$2,662,300	$3,820,600

Other Indicators	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Budgeted FTE	10.0	10.0	11.0	21.0	21.0
Vehicles	9	9	10	10	10

Subcommittee Table of Contents

Program: Captive Insurers

Function

The Captive Insurance Division was created in 2003 when the Captive Insurance Companies Act was passed by the Legislature. The division licenses captive insurance companies formed by companies to manage their risk exposure. It licenses captive insurance companies, monitors their solvency and financial strength. The division is funded by fees dedicated to the program. Currently, the division regulates 40 Utah domiciled companies.

Funding Detail

Sources of Finance	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Dedicated Credits Revenue	$6,700	$168,600	$258,600	$250,000	$367,300
Beginning Nonlapsing	$0	$6,700	$172,400	$309,200	$297,900
Closing Nonlapsing	($6,700)	($172,400)	($317,800)	($316,000)	($294,300)
Total	$0	$2,900	$113,200	$243,200	$370,900

Categories of Expenditure	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Personal Services	$0	$0	$93,500	$201,800	$293,400
In-State Travel	$0	$0	$100	$100	$2,000
Out of State Travel	$0	$1,800	$6,500	$19,200	$10,100
Current Expense	$0	$1,100	$13,100	$9,300	$23,100
DP Current Expense	$0	$0	$0	$12,800	$42,300
Total	$0	$2,900	$113,200	$243,200	$370,900

Other Indicators	2005 Actual	2006 Actual	2007 Actual	2008 Actual	2009 Approp
Budgeted FTE	0.0	1.0	0.0	0.0	0.0

Subcommittee Table of Contents