No Speedy Action On Ind. Bill To Cut Premium Tax

There appears to be no prospect of quick passage for a bill to lower the Indiana state premium tax, according to a property-casualty insurance trade group lobbyist.

The approval by the House Insurance Committee yesterday is only a first step, said Tami Stanton, regional manager of the National Association of Mutual Insurance Companies.

"The House Insurance Committee's unanimous approval of HB 1250 is a tremendous start for the bill, but there is a long legislative road ahead," Ms. Stanton said.

By lowering the premium tax, she asserted, Indiana will be more competitive with states such as Illinois, Iowa, Nebraska, South Carolina and Wyoming that, in general, have lower premium tax rates than Indiana's current 1.3 percent.

Ms. Stanton added that HB 1250 will be assigned to the Ways and Means Committee for another hearing due to the fiscal impact on the state.

Steve Williams, president of the Insurance Institute of Indiana, said that the bill would make the state's premium tax one of the lowest in the nation, thus eliminating any retaliatory penalties Indiana domestics pay to write in other states.

According to testimony regarding fiscal impact provided by the state and the insurance industry, the amount of money Indiana's general fund receives from insurers will continue to grow but at a lower percentage rate under HB 1250.

The National Association of Insurance Commissioners reports Indiana's total revenue from the insurance industry in 2004 was $183,455,189.

Authored by Rep. Craig Fry, D-Mishawaka, HB 1250 would lower the premium tax rate over a 3-year period, beginning with a reduction to 1.2 percent in 2008, followed by 1.1 percent in 2009 and, finally, down to 1 percent in 2010.

The bill emanates from the Indiana Economic Development Council, the entity created by Republican Gov. Mitch Daniels, to strengthen the Hoosier state's economic development strategy.

In testifying for the bill, Insurance Commissioner Jim Atterholt said when he meets with CEOs currently headquartered in other states, their first question is always about Indiana's premium tax rate.

Indiana previously lowered its premium tax with legislation passed in 2001, which dropped the rate from 2 percent to 1.3 percent over a five-year period.