The Washington Legislature has approved a bill that would shift $10 million from the state’s Office of Insurance Commissioner Regulatory Account to the State General Fund — a move that insurers oppose.
Legislators decided in Senate Bill 6444 to shift the funds as part of a last minute enactment in the supplemental budget in the Special Budget Session that adjourned on April 12, 2010. The bill is awaiting Gov. Chris Gregorie’s signature, but the American Insurance Association is requesting she veto the bill “because an adequately funded and functional OIC benefits insurers and consumers.”
The Office of the Insurance Commissioner needs to be properly funded to maintain a viable, competitive and sound insurance market in Washington, safeguarding policyholders and providing protection through anti-fraud and consumer protection programs. “Underfunding the OIC could result in a reduction of staff that lessens these essential services, and impinge on the ability of the OIC to act fully in its supervisory role. We are also concerned that moving funds away from the OIC will adversely affect the accreditation of the OIC by the National Association of Insurance Regulators,” the association said in its letter to the Governor.
Insurers already pay taxes to support the Washington State Government. The gross premium tax levied on insurers currently raises about $900 million each biennium, a substantial amount that places the insurance sector nearly at the top of state revenue sources.
Insurers currently pay over $900 million in gross premium tax biennially in Washington state. If the Commissioner were able to increase the current surcharge to preserve OIC programs and protections to back-fill from the removal for funds, higher costs to consumers would be an additional burden in addition to other tax increases, and unwanted in view of the present economic situation. Also, an increase in the surcharge could result in the imposition of a retaliatory insurance tax by other states on Washington domiciled insurers, the association said.
AIA is a national trade association representing more than 350 property and casualty insurers that write insurance in every jurisdiction in the United States. U.S. premiums for AIA member companies exceed $120 billion annually.
Sources: Washington Legislature, AIA
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