Bill Text: HI HB2851 | 2010 | Regular Session | Introduced

Hawaii House Bill 2851 (Prior Session Legislation)

NOTE: There are more recent revisions of this legislation. Read Latest Draft

Bill Title: Insurance Premium Tax Rates; Increase

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Engrossed - Dead) 2010-03-16 - (S) The committee(s) on CPN recommend(s) that the measure be HELD. The votes in CPN were as follows: 4 Aye(s): Senator(s) Baker, Espero, Green, Ihara; Aye(s) with reservations: none ; 0 No(es): none; and 3 Excused: Senator(s) Ige, Sakamoto, Hemmings. [HB2851 Detail]

Download: Hawaii-2010-HB2851-Introduced.html

HOUSE OF REPRESENTATIVES	H.B. NO.	2851
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO INSURANCE.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. The purpose of this Act is to increase insurance premium tax rates.

SECTION 2. Section 431:7-202, Hawaii Revised Statutes, is amended by amending subsections (a), (b), (c), and (d) to read as follows:

"(a) Each authorized insurer, except with respect to all life insurance contracts, ocean marine insurance contracts, and real property title insurance contracts, shall pay to the director of finance through the commissioner a tax of [~~4.265~~] 5.331 per cent on the gross premiums written from all risks or property resident, situated, or located within this State, during the year ending on the preceding December 31, less return premiums (but not including dividends paid or credited to policyholders), and less any reinsurance accepted (the tax upon such business being payable by the direct writing insurer).

All premiums written, procured, or received in the State shall be presumed to have been from risks or property resident, situated, or located within the State. This presumption may be rebutted as to any premium:

(1) By showing that it has been properly allocated or apportioned and reported as a taxable premium of another state or other appropriate taxing authority; or

(2) By facts as to the residence, situation, or location of the risks or property, conclusively showing the nontaxability of the premium.

(b) Each authorized insurer, with respect to life insurance contracts, shall pay to the director of finance through the commissioner a tax of [~~2.75~~] 3.437 per cent on the gross premiums received from all risks resident within this State, during the year ending on the preceding December 31, less return premiums, dividends paid or credited to policyholders, and reinsurance accepted (the tax upon such business being payable by the direct writing insurer).

The tax also shall apply to premiums for insurance written on individuals residing outside the State unless the direct writing insurer shall show the payment of a comparable tax to another appropriate taxing authority. Such showing may be required as to any premium written, procured, or received in the State.

(c) Each authorized insurer [shall], with respect to all ocean marine insurance contracts written within the State, during the year ending on the preceding December 31, shall pay to the director of finance through the commissioner a tax of [~~.8775~~] 1.0968 per cent on its gross underwriting profit. The gross underwriting profit shall be ascertained by deducting from the net premiums (i.e., gross premiums less all return premiums and premiums for reinsurance ceded) on such ocean marine insurance contracts, the net losses paid (i.e., gross losses paid less salvage and recoveries on reinsurance ceded) during such year under such contracts. In the case of an insurer issuing participating contracts, the gross underwriting profit shall not include, for computation of the tax prescribed by this subsection, the amount refunded, or paid as participation dividends, by such insurer to the holders of such contracts.

(d) Each authorized insurer, with respect to real property title insurance contracts written on real property situated within this State during the year ending on the preceding December 31, shall pay to the director of finance through the commissioner a tax of [~~4.265~~] 5.331 per cent of the amount of the risk premium actually received by the authorized insurer for the provision of such insurance. The amount of the risk premium received by the authorized insurer for the provision of real property title insurance shall be an amount equal to the amount actually received by the authorized insurer solely for the provision of real property title insurance coverage in accordance with the underwriting agreement or contract between the authorized insurer and the underwritten title company."

SECTION 3. Section 431:8-205, Hawaii Revised Statutes, is amended by amending subsection (c) to read as follows:

"(c) Gross premiums charged for the insurance, less any return premiums, are subject to a tax at the rate of [~~4.68~~] 5.85 per cent. At the time of filing the report required in subsection (b), the insured shall pay the tax to the commissioner.

As used in this subsection, "gross premiums" mean the amount of the policy or coverage premium charged by the insurer in consideration for the insurance contract. Any charges for policy, survey, inspection, service, or similar fees or other charges added by the broker shall not be considered part of gross premiums."

SECTION 4. Section 431:8-315, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) On or before March 15 of each year, each surplus lines broker shall pay to the director of finance, through the commissioner, a premium tax on surplus lines insurance transacted by the broker during the preceding calendar year. The tax shall be in the amount of [~~4.68~~] 5.85 per cent of gross premiums, less return premiums, on taxable surplus lines insurance.

SECTION 5. Section 431:19-116, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Each captive insurance company licensed to do business in this State shall pay to the director of finance through the commissioner a tax on gross premiums on or before March 1 of each year, as follows:

(1) [~~.25~~] 0.3125 per cent on $0 to $25,000,000 of gross premiums for insurance written on all risks or property resident, situated, or located within this State, and on risks and property situated elsewhere upon which no premium tax is otherwise paid during the year ending on the preceding December 31, less return premiums and less any reinsurance accepted;

(2) [~~.15~~] 0.1875 per cent on more than $25,000,000, to $50,000,000 of gross premiums for insurance written on all risks or property resident, situated, or located within this State, and on risks and property situated elsewhere upon which no premium tax is otherwise paid during the year ending on the preceding December 31, less return premiums and less any reinsurance accepted;

(3) [~~.05~~] 0.0625 per cent on more than $50,000,000, to $250,000,000 of gross premiums for insurance written on all risks or property resident, situated, or located within this State, and on risks and property situated elsewhere upon which no premium tax is otherwise paid during the year ending on the preceding December 31, less return premiums and less any reinsurance accepted; and

(4) [~~0.00~~] 0.05 per cent on more than $250,000,000 of gross premiums for insurance written on all risks or property resident, situated, or located within this State, and on risks and property situated elsewhere upon which no premium tax is otherwise paid during the year ending on the preceding December 31, less return premiums and less any reinsurance accepted[;

~~provided that the annual maximum aggregate tax on gross premiums to be paid by a captive insurance company shall not exceed $200,000~~]."

SECTION 6. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 7. This Act shall take effect on July 1, 2010 and shall be repealed on June 30, 2015; provided that sections 431:7-202(a), (b), (c), and (d), 431:8-205(c), 431:8-315(a), and 431:19-116(a), Hawaii Revised Statutes, amended by this Act shall be reenacted in the form in which they existed on the day prior to the effective date of this Act.

INTRODUCED BY:	_____________________________

Report Title:

Insurance Premium Tax Rates; Increase

Description:

Increases the insurance premium tax rates. Repeals the ceiling on insurance premium taxes payable by a captive insurance company. Takes effect on 7/1/10 and sunsets on 06/30/15.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.