Pennsylvania Gov. Tom Ridge has signed tax legislation providing a premium tax offset for property and casualty insurers, ensuring that the state’s guaranty fund system remains viable. Pennsylvania joined 18 other states that currently have premium tax offsets in place.
Last year the guaranty fund assessment of premiums was increased to its maximum level of 2 percent due to the insolvency of two medical malpractice insurers. This assessment is in addition to the 2 percent premium tax that insurers pay.
State guaranty fund systems have worked well across the country in protecting the interests of insurance companies and policyholders by providing a mechanism to pay the claims of a property and casualty insurer that becomes insolvent. The offset will be the amount by which an insurer’s annual assessment to the guaranty fund exceeds 1 percent of their net direct written premiums and will be spread out equally over five years.
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