California Insurance Commissioner Dave Jones announced today issued an order that every insurer licensed to write workers’ compensation in the state must report their federal income tax savings annually through a rate filing in light of the new tax law.
The recent revision to the Federal Tax Schedule for 2018 reduced the corporate tax rate from 35 percent to 21 percent. That means that nationally insurers will now be able to retain even more of policyholder premiums as profit, according to Jones.
“Any savings to insurers should be passed along to California businesses,” Jones said in a statement. “This order will allow my department to examine workers’ compensation insurers’ savings and rates and provide transparency to the public. I urge insurers to pass these savings along to policyholders.”
Jones’ order will require each insurer to submit a rate filing to report the dollar amount of their tax savings by Dec. 31 and on a yearly basis through 2020.
Insurers will need to provide details about how those savings impact their rates. The insurer must also provide a detailed explanation if they have determined that there is no rate impact, stating why the reduction in the federal corporate tax rate does not affect their rates.
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