Legislative Report

March 7, 2014 BOSE PUBLIC AFFAIRS GROUP INSURANCE BULLETIN XIV, NUMBER 9

In This Issue

GENERAL ASSEMBLY OVERVIEW

The House and Senate concluded the second half of session this week. House and Senate leaders were quick to begin assigning conferees to various conference committees in order to expedite the conference committee process which must be finished by midnight on March 14, the statutory sine die deadline for the 2014 General Assembly. BPAG professionals covered a variety of conference committee meetings in order to closely monitor any last-minute insertions of language into various bills. Conference committees will continue next week as there are only a few bills remaining which require major negotiations among legislators. Due to this, legislative leaders have indicated the potential to adjourn a few days early, possibly Wednesday of next week. One such topic that will continue to be discussed is the proposed reduction of the business personal property tax. The House approved SB 1 this week which now contains a number of provisions related to tax reduction. The first is a provision that provides a county income tax council may adopt an ordinance to exempt from property taxation any new business personal property (other than utility personal property) that is located in the county. This language is similar to how the House proposal, HB 1001, began this session. However, the Senate amended HB 1001 similar to how SB 1 was originally introduced in that HB 1001 specifies that if the acquisition cost of a taxpayers business personal property tax in a county is less than $20,000 for a particular assessment date in 2016 or later, the taxpayer is exempt from the tax. Both proposals include similar language referred to as a superabatement which allows a designating body to grant a property tax abatement under the existing abatement laws for new business personal property that has an acquisition cost of at least $3,000,000. HB 1001 limits the super-abatement not to exceed 20 years, rather than the standard 10 year limit on abatement. SB 1 has a 25 year limitation. HB 1001 and SB 1 both phase down the corporate income tax rate from 6.5% in 2015 to 4.9% in 2021 in HB 1001, and 4.9% in 2022 in SB 1. Among numerous other tax provisions, there will be a study committee this summer and next on income tax deductions and exemptions. Transportation funding remains at the forefront of various legislative proposals this session. HB 1002 authorizes the State Budget Agency to

General Assembly Overview Unclaimed Life Insurance Benefits IDOI Bill Tax Credits Electronic Delivery of Insurance Documents Workers Comp

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transfer up to $200 million from the Major Moves 2020 Trust Fund to the Major Moves Construction Fund, which is overseen by the Indiana Department of Transportation (INDOT). This transfer must take place prior to July 1, 2014. This funding may be used for any purpose of the Major Moves Construction Fund, which includes any obligation incurred by the Indiana Finance Authority, INDOT, or an operator in connection with the execution and performance of public-private agreements for tollways or toll roads, for lease payments to the Indiana Finance Authority, and to fund projects in INDOTs transportation plan. Pre-kindergarten remains a top priority of Gov. Pences agenda. However, the Senate removed the pilot program in HB 1004 as it passed the House and instead inserted language to establish a study committee on pre-kindergarten and early learning. Concerns about the cost of such a program led to the creation of the PreKindergarten and Early Learning Study Commission which must have a report to the General Assembly before November 1, 2014 and is set to expire on January 1, 2015. The Governor has been publicly advocating for the General Assembly to restore the pre-k pilot program. A late push to obtain public financing for a proposed soccer stadium in Indianapolis found the end of the road this week. A proposal was inserted in the House Ways & Means Committee that called for an $87 million dollar stadium that would be paid for with a ticket tax and the capture of sales taxes at the stadium. It was approved by the House but a number of Senators believe the minor league soccer team, known as the Indy Eleven, needs to play at least one season before public financing is potentially approved..

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UNCLAIMED LIFE INSURANCE BENEFITS

SEA 220, authored by Sen. Travis Holdman (R), requires insurers to use the SSAs Death Master File or a database as inclusive on all in-force policies, annuity contracts and retained asset accounts to help with the accurate administration of unclaimed death benefits. As reported last week, the bill was amended by Rep. Lehman on second reading in the House to remove the prospective language so that the bill applies to all in-force policies and contracts. As amended, the bill passed the House 94-0. This week, Sen. Holdman concurred with the House changes and the bill passed out of the Senate 48-1. It is now on its way to the Governor.

IDOI BILL
HB 1206, authored by House Insurance Chairman Matt Lehman (R), does the following: (1) removes a requirement for life insurers to submit individual investments to the Department of Insurance; (2) removes a requirement that a foreign or alien insurer submit an

application for admission to do business in Indiana in duplicate; (3) changes from March 15 to July 1 of each year the due date for certain insurance holding company filings; (4) adopts ORSA; (5) repeals a provision requiring the Commissioner to examine and publish a foreign or alien insurers annual condensed statement of assets and liabilities; (6) specifies requirements for motor vehicle service contracts; (7) removes IC 27-1-13-16(c) regarding the requirement to stamp envelope if residential policy coverage has been reduced, restricted or removed; and (8) requires a $2,500 registration fee for captive insurers doing business in Indiana. The bill passed out of the Senate on Tuesday by a vote of 46-2. Upon its return to the House, Rep. Lehman dissented to possibly fix some technical issues. The conference committee hearing will occur early next week.

TAX CREDITS IN CONFERENCE COMMITTEE

SB 367, originally filed as a property tax bill, was amended late in the Senate committee process and included a sunset on numerous tax credits; including, a sunset of the following: Indiana Life and Health Guaranty Association Tax Credit (12/31/17), Indiana Insurance Guaranty Association Tax Credit (12/31/17) and the Indiana Comprehensive Health Insurance Association Tax Credit (1/1/17). The bill was amended in Ways and Means last week and removed all the tax credit sunsets, including ours. As amended, the bill passed out of the House 73-24. It is now waiting for dissent or concurrence from Sen. Hershman. HB 1020, which also contains a sunset of numerous tax credits (including the insurance guaranty fund tax credits with a sunset of 2020) passed the Senate last week by a vote of 41-8. Rep. Koch (the author of HB 1020) dissented on the bill and a conference committee meeting was held yesterday. During the meeting, Rep. Koch indicated that all of the tax credit sunset language will be removed from the bill. Additionally, Sen. Hershman also added the tax credit sunset language to HB 1266 with a sunset date of 2022. That bill passed the Senate on Tuesday by a vote of 48-1. House author Rep. Leonard has dissented on the bill and a conference committee is scheduled for Monday. Stay tuned.

ELECTRONIC DELIVERY OF INSURANCE NOTICES AND DOCUMENTS

HEA 1058 (Rep. Peggy Mayfield) provides for the electronic delivery of insurance notices and documents instead of other modes of delivery otherwise required for such notices and documents. The bill requires a recipient's consent to electronic delivery and a method to withdraw consent. It also includes provisions regarding electronic

posting of documents on an insurers website. The bill passed the Senate on Tuesday 48-0. It now moves to the Governors office for consideration.

WORKERS COMP
SB 294 (an encore to HEA 1320 from last year) contains more restrictive language relative to repackaged drugs, clarification with respect to the definition of a medical service provider, prohibits double billing for implants and allows corporate officers to exempt themselves from work comp coverage. The bill passed out of the Senate last week 95-1 and is still waiting for concurrence or dissent from Sen. Boots.

For more information

Trent Hahn tfhahn@bosepublicaffairs.com Mike OBrien mobrien@bosepublicaffairs.com Telephone: 317/684-5400 Fax: 317/684-5432