Bill might stem the loss of insurance jobs
The state has lost 10 of the 53 property and casualty insurance companies that were incorporated here in 1997, along with 1,000 related jobs — more than 10 percent of the industry’s labor force. The New Hampshire House has spent a year looking at a bill that it supporters say will stop or reverse this trend by dropping the state’s insurance premium tax from 2 percent to 1 percent.
HB 678 won a 19-0 House Commerce Committee endorsement and sailed through the House Jan. 4 as part of the consent agenda, but it still faces tough vetting in the Ways and Means Committee, which is considering ways to make up as much as $14 million in decreased state revenue.
Rep. Ben Parker, R-Londonderry, chairs the subcommittee looking at the bill and wants to know how much and how quickly the proposed change might help the economy. Projected growth in the business enterprise and business profits taxes could offset some or all of the lost funding, bill proponents say.
Parker said the insurance tax varies from half a percent to 4.5 percent among states, which compete to keep their own insurance jobs and attract more. But it’s worse than a zero sum game because this sector is shedding jobs across the country thanks to better technology and other efficiencies.
“It could be a huge benefit for us to be lower (in our tax),” Parker said. “These jobs range from $38,000 to $57,000 a year.”
Insurance Commissioner Roger Sevigny testified that 956 carriers do some business in New Hampshire, but 913 call another state their headquarters for tax purposes. He said New Hampshire has to address a crisis or it will keep losing companies.
“States like Nebraska, Iowa, Indiana and Ohio are actively marketing their favorable tax climates,” Sevigny warned. “Companies such as Jefferson Pilot and AFLAC have redomiciled to Nebraska, as well as Pacific Life, the fourth largest mutual life insurance company in the country.”
He said the temporary loss of funding under HB 678 would be an investment in new firms, new jobs and new taxes. The bill would make New Hampshire the first state on the Eastern Seaboard to cut its premium tax. That lure, plus the state’s other tax advantages, might make it the most attractive state in the country for insurers to move to, he says.
A study conducted by Ernst & Young predicts the state would lose another 1,000 insurance jobs if it does nothing. Certain companies could save as much as $2 million a year by relocating.
Mike Bergeron, the state’s business development director, showed lawmakers the recruiting letter he might send insurers around the country if the bill passes. The lead was the cut in premium tax.
“That’s one more good reason to consider redomiciling your company in New Hampshire,” he wrote. – CHRIS DORNIN/GOLDEN DOME NEWS