Insurance commissioner presents HB1010 budget, seeks fee modernization and reserve increase

Jon Godfread, North Dakota insurance commissioner, told the House Appropriations Committee's Government Operations Section that House Bill 1010 is a measured request to maintain regulatory oversight and support the newly transferred State Fire Marshal's responsibilities.

Godfread said the department currently operates eight divisions and 47 full-time positions, and he reviewed staffing, program responsibilities and several legislative fixes he said are needed to avoid cash-flow problems. "Thanks for the opportunity to present our budget bill," Godfread said as he opened his remarks.

Why it matters: The Insurance Department regulates insurers and producers, administers the State Health Insurance Assistance Program (SHIP) and now houses the State Fire Marshal's Office after a 2023 transfer. The department said recent statutory changes created funding flows that strain the department's insurance regulatory trust fund and that those strains have operational impacts on investigations, local fire-department support and consumer assistance.

Major points presented

- Organization and workload: Godfread summarized the department's eight divisions (legal; life and health; property and casualty; producer licensing; company licensing and examinations; insurance fraud; administrative services; and the state fire marshal's office) and the FTE counts he provided for several divisions (for example: legal division 6 FTEs; life and health 8 FTEs; property and casualty 5 FTEs; producer licensing 3 FTEs). He said the department monitors roughly 2,578 licensed insurance companies and oversees more than 114,000 licensed producers.

- Fire marshal and firefighter funding: The Department said the North Dakota Fire Fighters Association (NDFA) received a $240,000-per-biennium allocation from the insurance regulatory trust fund via legislation the previous session. Fire districts' funding from insurance tax distribution rose to $1,350,000 in 2023 and to about $1,450,000 in 2024, the commissioner said. The department also described hiring challenges in rural postings and the need to recruit and retain deputy fire marshals statewide.

- Fees and trust-fund reserve: Godfread described cash-flow and reserve constraints tied to the insurance regulatory trust fund's $1,000,000 reserve limit and said the department introduced House Bill 1123 to modernize fees and fines so revenues match administrative costs. He also said Senate Bill 2090 was introduced to eliminate redundant billing between state agencies and the State Fire Marshal. He told the committee the department would pursue raising the trust fund reserve to $3,000,000 if HB1123 does not pass.

- Pay equity and staffing requests: The department has used a "target market equity" pool to adjust salaries for key positions and is requesting an additional equity package of $300,000 for the upcoming biennium to address pay gaps for deputy fire marshals and attorneys. Godfread said a roughly $45,000 adjustment would make a Williston deputy fire marshal position more competitive; he said attorney pay adjustments were being sought separately and were not fully included in the executive request. The department's salary-and-wages request figure presented to the committee (noting it also depends on any legislative compensation package) was $12,723,358, and the department asked for 4 new FTEs.

- FTE funding pool implementation problems: Godfread described a prior legislative decision that removed $644,746 from the department's salary-and-benefit authority and said the department applied to reclaim $532,798 through an FTE funding pool. He described a resulting shortfall of $111,948 and disputed interpretations of the pool's calculations between legislative counsel and the Office of Management and Budget (OMB). He said, practically, the department avoided a shortfall by holding vacancies and finding savings elsewhere, but called the implementation problematic.

Committee exchanges and next steps

- Representative Bosch asked about open positions and hiring capacity; Godfread said the department had five vacancies at the time of the hearing but that it was actively recruiting and filling roles.

- OMB staff (identified in the hearing by "Larry") clarified the budget figures and comp-package assumptions during the committee's review of the executive (Burgum) budget.

- Godfread said the department expects to return to the committee for the "Armstrong" (revised) budget presentation and for further technical questions. He also noted several studies the department has funded (autonomous vehicles and insurance; captive insurance) and ongoing work drafting legislation on property-market insurance reform.

Ending

Godfread closed by saying the department would return to discuss the Armstrong budget and follow up on fee and trust-fund proposals. No formal committee votes were recorded on HB1010 during the hearing transcript included here.