Louisiana House Bill HB462

Louisiana 2021 Regular Session

• Introduced: 4/2/21
• Refer: 4/2/21
• Refer: 4/12/21
• Report Pass: 4/22/21
• Engrossed: 4/28/21
• Refer: 4/29/21
• Report Pass: 5/5/21
• Enrolled: 5/13/21
• Chaptered: 6/1/21
• Passed: 6/1/21

Caption

Provides relative to the tax on surplus lines and unauthorized insurance (EN SEE FISC NOTE GF RV See Note)

Impact

In enacting HB 462, the Louisiana legislature seeks to provide a more organized approach to handling surplus lines insurance taxation. The bill establishes reporting requirements and penalties for failure to comply, which could significantly affect brokers and policyholders who engage in surplus lines transactions. The introduction of specific penalties, including a potential ten percent increase in tax due for non-compliance, underscores the importance of timely and accurate reporting. Furthermore, the ability for the commissioner to waive penalties under certain circumstances introduces some flexibility into enforcement, which may help mitigate undue burdens on small businesses operating in this space.

Summary

House Bill 462 aims to amend existing statutes regarding the taxation of surplus lines and unauthorized insurance. The bill establishes a clear structure for imposing a tax of four and eighty-five one hundredths of one percent on gross premiums for insurance placed through licensed surplus lines brokers as well as for unauthorized insurance directed placed by policyholders. This legislation is intended to enhance compliance and ensure that taxes on these types of insurance are properly reported and remitted to the state treasury, thereby contributing to the state's general fund.

Sentiment

Initial sentiment surrounding HB 462 appears to lean towards support from financial sectors that advocate for clear regulations and compliance frameworks. Stakeholders who favor the bill argue that it creates a necessary structure for tax collection on surplus lines, ultimately benefiting the state's revenue. However, concerns may arise among brokers and policyholders over the new reporting obligations and penalties, signaling a degree of apprehension within the community about increased regulatory burden.

Contention

Notable points of contention focus on the implications of the increased regulatory oversight and the strict deadlines for reporting and tax remittance imposed by the bill. Critics could argue that the additional compliance requirements related to surplus lines insurance may disproportionately affect smaller insurance brokers who may lack the resources to comply efficiently with stringent tax reporting structures. Moreover, there may be discussions about whether such regulations could stifle competition within the market for unauthorized insurance placements.