P-C Trades Oppose Maine Tax Hike
By Steve Tuckey
NU Online News Service, April 6, 4:20 p.m. EDT?Maine state legislators' consideration of a premium tax increase has spurred opposition from property-casualty insurance companies.
P-c representatives were among those testifying yesterday at the Joint Labor Committee hearing of the Maine State Legislature held to consider increasing the premium tax on auto, homeowners, and fire and liability policies from 2 percent to 2.5 percent.
"Maine already has one of the highest tax rates for insurers with a 1.4 percent premium fire tax in addition to the two percent tax," said Paul Moran, American Insurance Association vice president. "An increase in the premium tax would be grossly anti-competitive and unfair to Maine's insurers and their policyholders."
The proposal calls for insurers to pay a subsidy through the tax toward the costs of retiree health insurance for some municipal and county law enforcement officers and firefighters.
Public employee representatives were on hand yesterday to testify in favor of the rate increase.
Steve Broadie, financial regulation manager for the Property Casualty Insurers Association of America (PCI), said that virtually all states impose some sort of premium tax on both p-c and life insurance companies. But he said that there has not been any great effort to raise the tax in the past few years of state cutbacks.
"The general trend of the premium tax has been down," he said.
Legislators, he added, also tend to be receptive to arguments that if they raise the premium tax then companies domiciled in the state face retaliatory hikes in other states where they are licensed.
In addition to Maine, the industry is gearing up for a similar battle in Michigan; where the governor has proposed doubling the current one percent rate to fund economic incentives for the troubled auto industry.
Two percent is about the average rate across the country, Mr. Broadie said.
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