California's Jones Orders Comp Writers to Report Federal Tax Savings
Plus developments in life, captives and surplus lines.
- August 2018
Workers' Comp: California Insurance Commissioner Dave Jones has ordered licensed workers' compensation insurers in his state to report their federal income corporate tax savings for the next three years.
The order comes in reaction to Congress' passage of the Tax Cuts and Jobs Act that cut the corporate tax rate from 35% to 21% effective Jan. 1, 2018. The first filing is due Dec. 31, and the order requires additional annual filings through Dec. 31, 2020.
The California Department of Insurance's announcement said insurers must provide detailed information about how the federal tax savings impact their rates. Also, the insurer must provide a detailed explanation if they determined there is no rate impact and must show why the federal tax cut had no rate impact.
The order was met by opposition from the Property Casualty Insurers Association of America, which said the order is another example of regulators overstepping their boundaries. PCI said average workers' comp rates for 2017 are 10% below the 2016 rates and 17% below the 2015 rates. “Insurers are passing along savings to their customers in California's competitive market,” PCI Vice President Mark Sektnan said.
Pa. Compels Insurers to Participate in NAIC's Policy Locator Program
Life Insurance: Pennsylvania Gov. Tom Wolf has signed legislation requiring insurers selling life insurance or annuities in the commonwealth to participate in the National Association of Insurance Commissioners' National Life Insurance Policy Locator program, which helps beneficiaries receive benefits from life insurance policies that may have been lost.
Insurance Commissioner Jessica Altman said the legislation puts all insurers with life policies or annuities in Pennsylvania into the NAIC program.
Currently, participation is voluntary, but the Pennsylvania Insurance Department said the NAIC program already has recovered more than $9.61 million for nearly 1,092 state residents.
The new law specifies any insurer selling life insurance policies or annuities in Pennsylvania must provide the insurance department with an email address to which the department can send requests to search for policies. Such requests can be made either by a member of the decedent's family who has received a copy of the decedent's death certificate, or a personal representative of the decedent's estate.
North Carolina Exempts Taxes for Some Captives
Captives: North Carolina will exempt all U.S. captive insurers chartered outside of the state from paying state taxes on premiums earned, thanks to a new law.
The provision is part of Senate Bill 99, a budget bill that became law after lawmakers overrode Gov. Roy Cooper's veto.
It prohibits the Department of Revenue from taxing premiums earned by an out-of-state chartered or licensed captive doing business and insuring risks in North Carolina, according to Lane Brown, North Carolina Captive Insurance Association's vice president for governmental affairs.
The tax exemptions are for premium taxes, corporate income taxes, franchise taxes, privilege taxes and insurance regulatory charges imposed by the state Department of Insurance.
The new law stands in contrast to laws in states such as Tennessee, which imposes a procurement tax on captives chartered outside their domicile, but insure risks for companies doing business in Tennessee, Brown said.
Rhode Island Governor Rejects Time Extension for Producer Payments to Brokers
Surplus Lines: Rhode Island Gov. Gina Raimondo has vetoed surplus lines legislation lengthening the deadline in which surplus lines producers can pay bills that are due to their brokers.
H 7909 mandated bills from agents to surplus lines brokers would be due no less than 45 days from the end of the month in which the transaction occurs. Existing law allows for the cancellation of a policy within 10 days of a notice of non-payment to a surplus lines broker, according to the veto message.
But Raimondo's veto message said while the bill was written to help local insurance agents and consumers, it needs additional work. “I have heard from insurance brokers, carriers and some local agents that the time frame allowed in this legislation might be too long,” she wrote.
Raimondo said she is committed to working with the General Assembly in the next session “to achieve the intended goals of the legislation in a better format while protecting against unintended consequences.”