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California comp insurers must report savings from US tax reform

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California comp insurers must report savings from US tax reform

California Insurance Commissioner Dave Jones has ordered every insurer licensed to write workers compensation insurance in the state to report the tax savings related to the corporate tax overhaul passed in December.

Congress passed the legislation to, among other things, replace the previous structure of corporate income tax rates, which had a top rate of 35%, with a 21% rate.

The order will require each insurer to submit a rate filing to report the dollar amount of their tax savings by Dec. 31, and on a yearly basis through Dec. 31, 2020, according to a statement released on Monday.

Insurers must provide details about how those savings impact their rates and a detailed explanation if they have determined that there is no rate impact, stating why the reduction in the federal corporate tax rate does not affect their businesses.

Mr. Jones noted that tax reform means that national insurers will now be able to retain even more policyholder premium as profit.

“Any savings to insurers should be passed along to California businesses,” Mr. Jones said in the statement. “This order will allow my department to examine workers compensation insurers’ savings and rates and provide transparency to the public. I urge insurers to pass these savings along to policyholders.”

 

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