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H.B. 209

             1     

WORKERS' COMPENSATION PREMIUM ASSESSMENT

             2     
2011 GENERAL SESSION

             3     
STATE OF UTAH

             4     
Chief Sponsor: Michael T. Morley

             5     
Senate Sponsor: Karen Mayne

             6     
             7      LONG TITLE
             8      General Description:
             9          This bill modifies provisions related to revenue and taxation to amend requirements
             10      related to the workers' compensation premium assessment.
             11      Highlighted Provisions:
             12          This bill:
             13          .    modifies the limits on the amount of the assessment; and
             14          .    makes technical and conforming amendments.
             15      Money Appropriated in this Bill:
             16          None
             17      Other Special Clauses:
             18          None
             19      Utah Code Sections Affected:
             20      AMENDS:
             21          59-9-101 (Subsec (2)(c)(iv) Repealed 07/01/13), as last amended by Laws of Utah
             22      2009, Chapter 85
             23     
             24      Be it enacted by the Legislature of the state of Utah:
             25          Section 1. Section 59-9-101 (Subsec (2)(c)(iv) Repealed 07/01/13) is amended to
             26      read:
             27           59-9-101 (Subsec (2)(c)(iv) Repealed 07/01/13). Tax basis -- Rates -- Exemptions --


             28      Rate reductions.
             29          (1) (a) Except as provided in Subsection (1)(b), (1)(d), or (5), an admitted insurer shall
             30      pay to the commission on or before March 31 in each year, a tax of 2-1/4% of the total
             31      premiums received by it during the preceding calendar year from insurance covering property
             32      or risks located in this state.
             33          (b) This Subsection (1) does not apply to:
             34          (i) workers' compensation insurance, assessed under Subsection (2);
             35          (ii) title insurance premiums taxed under Subsection (3);
             36          (iii) annuity considerations;
             37          (iv) insurance premiums paid by an institution within the state system of higher
             38      education as specified in Section 53B-1-102 ; and
             39          (v) ocean marine insurance.
             40          (c) The taxable premium under this Subsection (1) shall be reduced by:
             41          (i) [all] the premiums returned or credited to policyholders on direct business subject to
             42      tax in this state;
             43          (ii) [all] the premiums received for reinsurance of property or risks located in this state;
             44      and
             45          (iii) the dividends, including premium reduction benefits maturing within the year:
             46          (A) paid or credited to policyholders in this state; or
             47          (B) applied in abatement or reduction of premiums due during the preceding calendar
             48      year.
             49          (d) (i) For purposes of this Subsection (1)(d):
             50          (A) "Utah variable life insurance premium" means an insurance premium paid:
             51          (I) by:
             52          (Aa) a corporation; or
             53          (Bb) a trust established or funded by a corporation; and
             54          (II) for variable life insurance covering risks located within the state.
             55          (B) "Variable life insurance" means an insurance policy that provides for life
             56      insurance, the amount or duration of which varies according to the investment experience of
             57      one or more separate accounts that are established and maintained by the insurer pursuant to
             58      Title 31A, Insurance Code.


             59          (ii) Notwithstanding Subsection (1)(a), beginning on January 1, 2006, the tax on that
             60      portion of the total premiums subject to a tax under Subsection (1)(a) that is a Utah variable
             61      life insurance premium shall be calculated as follows:
             62          (A) 2-1/4% of the first $100,000 of Utah variable life insurance premiums:
             63          (I) paid for each variable life insurance policy; and
             64          (II) received by the admitted insurer in the preceding calendar year; and
             65          (B) 0.08% of the Utah variable life insurance premiums that exceed $100,000:
             66          (I) paid for the policy described in Subsection (1)(d)(ii)(A); and
             67          (II) received by the admitted insurer in the preceding calendar year.
             68          (iii) (A) On or before October 1, 2009, and every three years after October 1, 2009, the
             69      Revenue and Taxation Interim Committee shall study the rate reduction contained in this
             70      Subsection (1)(d).
             71          (B) As part of the study required by Subsection (1)(d)(iii)(A) the Revenue and
             72      Taxation Interim Committee shall:
             73          (I) hear testimony from the commission and industry representatives;
             74          (II) make recommendations concerning whether the rate reduction should be continued,
             75      modified, or repealed; and
             76          (III) make findings regarding:
             77          (Aa) the cost of the rate reduction;
             78          (Bb) the purpose and effectiveness of the rate reduction; and
             79          (Cc) any benefits of the rate reduction to the state.
             80          (2) (a) An admitted insurer writing workers' compensation insurance in this state,
             81      including the Workers' Compensation Fund created under Title 31A, Chapter 33, Workers'
             82      Compensation Fund, shall pay to the tax commission, on or before March 31 in each year, a
             83      premium assessment on the basis of the total workers' compensation premium income received
             84      by the insurer from workers' compensation insurance in this state during the preceding calendar
             85      year as follows:
             86          (i) on or before December 31, 2010, an amount of equal to or greater than 1%, but
             87      equal to or less than 5.75% of the total workers' compensation premium income described in
             88      this Subsection (2)[(a)];
             89          (ii) on and after January 1, 2011, but on or before December 31, [2011] 2017, an


             90      amount of equal to or greater than 1%, but equal to or less than 4.25% of the total workers'
             91      compensation premium income described in this Subsection (2)[(a)]; and
             92          [(iii) on and after January 1, 2012, but on or before December 31, 2012, an amount of
             93      equal to or greater than 1%, but equal to or less than 2.25% of the total workers' compensation
             94      premium income described in this Subsection (2)(a); and]
             95          [(iv) on and after January 1, 2013, an amount of equal to or greater than 1%, but equal
             96      to or less than 1.25% of the total workers' compensation premium income described in this
             97      Subsection (2)(a).]
             98          (iii) on and after January 1, 2018, an amount equal to 1.25% of the total workers'
             99      compensation premium income described in this Subsection (2).
             100          (b) Total workers' compensation premium income means the net written premium as
             101      calculated before any premium reduction for any insured employer's deductible, retention, or
             102      reimbursement amounts and also those amounts equivalent to premiums as provided in Section
             103      34A-2-202 .
             104          (c) The percentage of premium assessment applicable for a calendar year shall be
             105      determined by the Labor Commission under Subsection (2)(d). The total premium income
             106      shall be reduced in the same manner as provided in Subsections (1)(c)(i) and (1)(c)(ii), but not
             107      as provided in Subsection (1)(c)(iii). The [tax] commission shall promptly remit from the
             108      premium assessment collected under this Subsection (2):
             109          (i) income to the state treasurer for credit to the Employers' Reinsurance Fund created
             110      under Subsection 34A-2-702 (1) as follows:
             111          (A) on or before December 31, 2009, an amount of up to 5% of the total workers'
             112      compensation premium income;
             113          (B) on and after January 1, 2010, but on or before December 31, 2010, an amount of up
             114      to 4.5% of the total workers' compensation premium income;
             115          (C) on and after January 1, 2011, but on or before December 31, [2011] 2017, an
             116      amount of up to 3% of the total workers' compensation premium income; and
             117          [(D) on and after January 1, 2012, but on or before December 31, 2012, an amount of
             118      up to 1% of the premium income; and]
             119          [(E) on and after January 1, 2013, and a subsequent fiscal year, no portion of the
             120      premium income;]


             121          (D) on and after January 1, 2018, 0% of the total workers' compensation premium
             122      income;
             123          (ii) an amount equal to 0.25% of the total workers' compensation premium income to
             124      the state treasurer for credit to the Workplace Safety Account created by Section 34A-2-701 ;
             125          (iii) an amount of up to 0.5% and any remaining assessed percentage of the total
             126      workers' compensation premium income to the state treasurer for credit to the Uninsured
             127      Employers' Fund created under Section 34A-2-704 ; and
             128          (iv) beginning on January 1, 2010, 0.5% of the total workers' compensation premium
             129      income to the state treasurer for credit to the Industrial Accident Restricted Account created in
             130      Section 34A-2-705 .
             131          (d) (i) The Labor Commission shall determine the amount of the premium assessment
             132      for each year on or before each October 15 of the preceding year. The Labor Commission shall
             133      make this determination following a public hearing. The determination shall be based upon the
             134      recommendations of a qualified actuary.
             135          (ii) The actuary shall recommend a premium assessment rate sufficient to provide
             136      payments of benefits and expenses from the Employers' Reinsurance Fund and to project a
             137      funded condition with assets greater than liabilities by no later than June 30, 2025.
             138          (iii) The actuary shall recommend a premium assessment rate sufficient to provide
             139      payments of benefits and expenses from the Uninsured Employers' Fund and to maintain it at a
             140      funded condition with assets equal to or greater than liabilities.
             141          (iv) At the end of each fiscal year the minimum approximate assets in the Employers'
             142      Reinsurance Fund shall be $5,000,000 which amount shall be adjusted each year beginning in
             143      1990 by multiplying by the ratio that the total workers' compensation premium income for the
             144      preceding calendar year bears to the total workers' compensation premium income for the
             145      calendar year 1988.
             146          (v) The requirements of Subsection (2)(d)(iv) cease when the future annual
             147      disbursements from the Employers' Reinsurance Fund are projected to be less than the
             148      calculations of the corresponding future minimum required assets. The Labor Commission
             149      shall, after a public hearing, determine if the future annual disbursements are less than the
             150      corresponding future minimum required assets from projections provided by the actuary.
             151          (vi) At the end of each fiscal year the minimum approximate assets in the Uninsured


             152      Employers' Fund shall be $2,000,000, which amount shall be adjusted each year beginning in
             153      1990 by multiplying by the ratio that the total workers' compensation premium income for the
             154      preceding calendar year bears to the total workers' compensation premium income for the
             155      calendar year 1988.
             156          (e) A premium assessment that is to be transferred into the General Fund may be
             157      collected on premiums received from Utah public agencies.
             158          (3) An admitted insurer writing title insurance in this state shall pay to the commission,
             159      on or before March 31 in each year, a tax of .45% of the total premium received by either the
             160      insurer or by its agents during the preceding calendar year from title insurance concerning
             161      property located in this state. In calculating this tax, "premium" includes the charges made to
             162      an insured under or to an applicant for a policy or contract of title insurance for:
             163          (a) the assumption by the title insurer of the risks assumed by the issuance of the policy
             164      or contract of title insurance; and
             165          (b) abstracting title, title searching, examining title, or determining the insurability of
             166      title, and every other activity, exclusive of escrow, settlement, or closing charges, whether
             167      denominated premium or otherwise, made by a title insurer, an agent of a title insurer, a title
             168      insurance producer, or any of them.
             169          (4) Beginning July 1, 1986, a former county mutual and a former mutual benefit
             170      association shall pay the premium tax or assessment due under this chapter. Premiums
             171      received after July 1, 1986, shall be considered in determining the tax or assessment.
             172          (5) The following insurers are not subject to the premium tax on health care insurance
             173      that would otherwise be applicable under Subsection (1):
             174          (a) an insurer licensed under Title 31A, Chapter 5, Domestic Stock and Mutual
             175      Insurance Corporations;
             176          (b) an insurer licensed under Title 31A, Chapter 7, Nonprofit Health Service Insurance
             177      Corporations;
             178          (c) an insurer licensed under Title 31A, Chapter 8, Health Maintenance Organizations
             179      and Limited Health Plans;
             180          (d) an insurer licensed under Title 31A, Chapter 9, Insurance Fraternals;
             181          (e) an insurer licensed under Title 31A, Chapter 11, Motor Clubs;
             182          (f) an insurer licensed under Title 31A, Chapter 13, Employee Welfare Funds and


             183      Plans; and
             184          (g) an insurer licensed under Title 31A, Chapter 14, Foreign Insurers.
             185          (6) An insurer issuing multiple policies to an insured may not artificially allocate the
             186      premiums among the policies for purposes of reducing the aggregate premium tax or
             187      assessment applicable to the policies.
             188          (7) The retaliatory provisions of Title 31A, Chapter 3, Department Funding, Fees, and
             189      Taxes, apply to the tax or assessment imposed under this chapter.




Legislative Review Note
    as of 1-7-11 9:21 AM


Office of Legislative Research and General Counsel


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