During the 2021 Regular Session of the Louisiana Legislature, three bills were passed that directly impact the surplus line insurance business.

House Bill 462 by Rep. Mike Huval, R-Breaux Bridge, deals with the 4.85 percent surplus lines tax. Essentially, the new law makes the policyholder of self-placed business responsible for reporting and paying the surplus line tax on Louisiana business. The surplus line broker’s responsibility for reporting and paying surplus line tax was codified in previous law.

Under the law, the tax is due without regard to the location of the covered property, risk or exposure and is due on all insurance placed through a surplus line broker with a surplus line insurer or other unauthorized insurer for which Louisiana is the home state of the policyholder. The broker is required to transmit quarterly to the commissioner a surplus line tax report and the tax payable.

The new law requires the 4.85 percent tax for all insurance placed directly by the policyholder with a surplus line insurer or other unauthorized insurer for which Louisiana is the home state. The policyholder direct placing insurance is required to transmit a direct placement tax report to the commissioner and remit the tax payable.

The commissioner shall prescribe the manner and form of the direct placement tax report.

Failure to make a report or pay the tax subjects the responsible party to a 10 percent penalty. After a lapse of 30 days, until the tax is paid and the report filed, the commissioner may suspend or revoke the broker’s license.

House Bill 462 received little opposition. The bill passed through the House on a 97-1 vote and through the Senate on a 34-0 vote. The bill was signed into law by Gov. John Bel Edwards on June 1 and became Act 32, which is effective July 1.

House Bill 566 by Rep. Edmond Jordan, D-Baton Rouge, reduces from 100 percent to 96 percent the portion of surplus line taxes collected by the commissioner that is allocated to the state’s general fund. The remaining four percent of collected revenues is dedicated to the Louisiana Fire Marshal Fund, effective July 1, 2022.

As initially submitted by Jordan, the bill provided that the portion of surplus lines taxes paid to the general fund would be reduced to 86 percent. The remaining 14 percent would be split as follows: six percent to the Louisiana Fire Marshal Fund and eight percent to the Two Percent Fire Insurance Fund. The allocation for the Two Percent Fire Insurance Fund was amended out of the bill, and the portion to the Louisiana Fire Marshal Fund reduced to four percent.

House Bill 566 received no opposition on final passage by the Senate and House. The bill was signed into law by the governor on June 15 and became Act 342, which is effective July 1.

Senate Bill 41 sponsored by Louie Bernard, R-Natchitoches, effectively repeals the requirement for foreign or alien insurers doing business in Louisiana to deposit with the commissioner a trust or safekeeping receipt indicating that $100,000 in money or approved bonds is on deposit in a bank doing business in Louisiana or a savings and loan chartered to do business in Louisiana.

Even though the deposit requirement is removed, the bill provides that, if a deposit in Louisiana is required by another state or jurisdiction as a condition of getting or maintaining a license or certificate of authority or surplus lines approval in that other state or jurisdiction, an insurer authorized in Louisiana may make the deposit.

Senate Bill 41 authorizes the commissioner to order an insurer to make and maintain a deposit, and requires every insurer making a deposit to provide the commissioner a safekeeping or trust receipt from the holder of the deposit by March 1 of each year.

The new law removes the conditions restricting the use of the deposit, but it stipulates that:

-If the insurer wants to withdraw any deposit or portion of a deposit, the insurer has to make a written request to the commissioner.

-For deposits made due to requirements of another jurisdiction, the commissioner must notify the jurisdiction of a withdrawal request.

-Thirty days after the notice to the other jurisdiction, without objection of a supervisory official from that jurisdiction, the commissioner is required to release the deposit.

-For deposits held as a condition for a certificate of authority in Louisiana, the commissioner is prohibited from releasing the deposit unless the grounds or conditions which led to the order requiring the deposit no longer exist.

-If the depositing insurer is placed in rehabilitation or liquidation, any deposit made in Louisiana may be surrendered to the receiver pursuant to an order of the receivership court.

The new law repeals the requirement for domestic insurers to make a deposit before receiving a certificate of authority.

Senate Bill 41 passed through the Senate on a 24-13 vote and through the House 101-0. Afterward, the Senate concurred with the House amendments on a 37-0 vote. The bill was signed into law by the governor on June 11 and became Act 159, which is effective July 1.

HomeBuilders Self Insurers Fund has surpassed $100 million in dividend payments to its qualifying members. “As a self-insured fund, nothing speaks more to our strength and stability than our ability to distribute dividends to our members year after year,” said Chris Duncan, CFO/COO of HomeBuilders. This milestone represents more than just a number; it exemplifies the commitment to teamwork and trust between HomeBuilders and its members. “Achieving this goal is a concrete sign of how everything is working together. When you combine our expertise in the area of workers’ compensation and our members’ commitment to working with us on loss control, we can achieve some pretty incredible things,” added Michael Morris, CEO of HomeBuilders.