HCS HB 490 -- WORKERS' COMPENSATION SURCHARGE

SPONSOR:  Luetkemeyer

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Services by a vote of 18 to 0 with 1 present.

This substitute changes the premium tax charged on the discounted
portion of high-deductible workers' compensation polices to an
administrative surcharge.  Under current law, this premium tax
results in retaliatory taxes being imposed in other states upon
Missouri-based insurers doing business in those other states.

Any amounts paid in excess of the surcharge amount actually due
will not be refunded, but will be credited toward any future
surcharges due.  A late-payment charge of 0.5% will apply to late
payments of the surcharge and interest for late payments will
accrue at a rate of 1.5% for each month the payment is
delinquent.  Records required to be filed with the Division of
Workers' Compensation pursuant to this law will be closed
records.  The substitute does not apply to self-insureds.  The
division will start collecting the surcharge on January 1, 2004.

FISCAL NOTE:  Not available at time of printing.

PROPONENTS:  Supporters say that the bill levels the playing
field for workers' compensation insurers domiciled in Missouri
when they are competing for business in other states.  All of the
states will assess retaliatory taxes against out-of-state
insurers to equal the taxes that the other states charge.  Some
insured companies choose to pay a higher deductible and get a
discount on their premiums, but the insurance company has to pay
a premium tax on that discounted amount.  So other states charge
a similar higher tax on the insurance contracts in their state
sold by Missouri insurance companies.  The bill changes this tax
on discounted premiums to an administrative surcharge, which will
not trigger the retaliatory tax in other states.

Testifying for the bill were Representative Luetkemeyer; and
Safety National Casualty Corporation.

OPPONENTS:  Those who oppose the bill say that the goal of the
bill can be accomplished simply by changing the terminology and
calling the premium tax a surcharge.

Testifying against the bill was American Insurance Association.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:12 am