Changing the rules for N.H. job growth

One of New Hampshire’s greatest strengths is its ability to attract innovative businesses through a combination of progressive regulations, attractive tax laws, a talented workforce and a great quality of life. Two sectors that hold real promise for bringing new business, and new jobs, to New Hampshire are banking and insurance.One is nondepository trust companies, which are financial institutions that manage trust assets on behalf of a variety of clients, ranging from individuals to 401(k) plans. Unlike traditional banks, nondepository trust companies do not take deposits or make loans. States have been competing with one another for years to try and create the most attractive location for establishing nondepository trust companies, which can bring tax revenues and good jobs to a state, often with lower regulatory costs.Over the past several years, New Hampshire has put itself on a short list of preferred states for these companies by adopting one of the most modern and flexible trust laws in the country and continually updating its laws to ensure that they are state of the art.Among those recognizing New Hampshire’s advantages for such institutions was Cambridge Trust Company, a 119-year-old independent, Massachusetts-chartered, full-service bank headquartered in Cambridge. Cambridge Trust had already operated branch locations in New Hampshire for a number of years, but it saw a great opportunity to expand its trust business by establishing an independent trust company here.Cambridge Trust established Cambridge Trust Company of New Hampshire, a New Hampshire non-depository trust company, in August of 2010, with offices on Main Street in Concord.According to Todd Mayo, president of Cambridge Trust Company of New Hampshire, “we think New Hampshire currently offers a very attractive financial, tax, regulatory and legal environment for trust companies and trust services. This favorable environment motivated us to expand our business in New Hampshire.”Cambridge Trust is not alone. Since New Hampshire reformed its trust laws, the number of nondepository trust companies located here has doubled, from 16 to 32. Every indication is that this growth will continue as New Hampshire’s reputation as a prime location for such companies continues its steady rise, particularly in Massachusetts and other New England states.And that’s just fine with the New Hampshire Banking Department. Robert Fleury, deputy bank commissioner, notes that “the Banking Department welcomes these high-quality companies to the state. The Legislature passed a set of laws that allows nondepository trust companies flexibility in developing products and services within a well managed regulatory framework.”Attracting new insurersMost of us dread the process of moving, even if we are excited about the prospect of where that move will take us. It can be the same for businesses, especially in heavily regulated industries like insurance, where the moving process can be particularly cumbersome.However, New Hampshire has sought to make this move easier and more attractive for out-of-state insurers considering relocation to New Hampshire. New Hampshire has adopted a relatively simple and straightforward process for insurers that wish to move to New Hampshire from another state. In addition, New Hampshire has lowered its premium tax rates over the last several years, such that it has some of the lowest rates in the eastern United States. Currently, the premium tax rate for property and casualty insurers and life insurers is 1.25 percent, while the premium tax rate for accident and health insurers is 2 percent.New Hampshire also has a favorable regulatory environment for insurers. The state Insurance Department views the prospect of insurers relocating to New Hampshire as a positive development, and actively seeks to encourage insurers to do so by making the process as smooth as possible.According to Insurance Commissioner Roger Sevigny, “our goal is to encourage healthy, vibrant companies to relocate to New Hampshire to boost a healthy competitive domestic marketplace for our consumers and to attract companies who can offer our state’s highly educated and experienced work force good paying jobs with future growth opportunities.”Although we have has yet to see a large number of insurers relocate to New Hampshire, the state has put itself in a great position to attract these insurers, and is poised to see gains in this area in the coming years.The keys to continue capitalizing on these opportunities are twofold.New Hampshire has seen positive economic growth over the last two years, and it continues to outperform most other states in the nation in terms of economic indicators. But to sustain this growth, New Hampshire must continue to attract new business by promoting its advantages. The banking and insurance sectors, where New Hampshire has purposefully been designed as an attractive locale, are a good place to start.Adam Varley is an attorney with the law firm of Rath Young & Pignatelli, where he is a member of the Business and Finance, Insurance and Healthcare practice groups. He can be reached at 603-226-2600 or acv@rathlaw.com.