Kentucky: Municipal Premium Tax Negotiations Continue

A Kentucky legislative working group drafting reform legislation is asking insurers doing business in the state if they will disclose policy-level information on municipal premium tax refunds in exchange for provisions in the statute requiring exhaustion of remedies before suit, certification of location software, and shortening of the statute of limitations.

For many years, insurers have worked to get some relief from the complicated and expensive system of premium taxes levied by Kentucky cities and counties. Companies are required to file returns on a quarterly schedule for each line of insurance in each jurisdiction, which produces hundreds, sometimes thousands, of returns in a year. Centralized collection of the returns by the state has been advocated without success.

"In the meantime, the difficulty of accurately assessing the tax and collecting it from policyholders has been problematical, capped by filings of class-action lawsuits against many of the carriers for inaccuracies in the tax status based on location of the residence," said Alan Smith, NAMIC state affairs manager. "This typically happens when the actual tax jurisdiction is other than the one where the insured believes he or she resides, or the zip code indicates.

"This set the stage for yet another try to fix this mess in the state legislature, and there are serious negotiations underway between the insurers, cities and counties," he continued. "If any NAMIC members would like to indicate how they feel about this proposal, please contact me at 614-893-9999 as soon as possible."

Direct questions to NAMIC State Affairs Manager Alan Smith.

Posted: Tuesday, January 29, 2008 12:00:00 AM. Modified: Thursday, January 31, 2008 9:40:37 AM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.