Connecticut House Bill HB05374

Connecticut 2020 Regular Session

• Introduced: 2/27/20
• Refer: 2/27/20

Caption

An Act Exempting Certain Insureds From The Insurance Premium Tax.

Impact

If enacted, HB05374 is expected to have notable implications on the state's insurance laws. The bill's provision for tax exemption would amend existing statutes governing the treatment of insurance premiums. This change is seen as a move to foster a more favorable environment for local governments to manage their insurance needs, thereby supporting their financial stability and operational capacity. The bill could also potentially set a precedent for similar legislative measures aimed at alleviating financial pressures on public entities in the state, encouraging broader adoption of association captive insurance as a viable alternative for risk management.

Summary

House Bill 05374 proposes the exemption of certain insured entities from the insurance premium tax, specifically targeting those insured by association captive insurance companies. These companies are defined as insurers that cover risks for member organizations within a specified association. The bill intends to benefit local government entities, such as towns, cities, and school districts, which may face significant financial burdens due to the existing tax framework. By providing this exemption, the bill aims to alleviate expenses for these entities, potentially allowing for a reallocation of funds towards other municipal needs.

Contention

Discussions surrounding HB05374 likely center on the ramifications of such an exemption. Proponents argue that it will promote fiscal responsibility among local entities and allow them to better manage their budgetary constraints. However, critics might raise concerns regarding the potential loss of revenue for the state, which relies on insurance premium taxes as a source of funding. Additionally, the bill may spark debates on the appropriateness of tax exemptions for specific groups, especially in a climate where public funding and resources are often strained.