Task force requests updated analysis of Louisiana premium tax credits and municipal-bond exemption

BATON ROUGE, La. — At a Sept. 5, 2025 meeting of the Premium Tax Task Force, members asked academics and state insurance officials to update a prior analysis of Louisiana's insurance premium tax and the state's investment tax credit, and to model how incremental reductions in the premium tax would affect retaliatory tax collections, state revenue and municipal bond demand. The task force voted to formalize a request for six specific data items and analyses.

The work centers on a long-standing set of credits that let insurers reduce their state premium-tax bills by investing qualifying assets in Louisiana, including municipal bonds. "I am Christine Berry, professor of risk management and insurance at ULM," Berry told the task force as she summarized the 2006'13 work she performed for the Department of Insurance and her recommendation from that study: "I had landed on a 1.75% tax as a recommendation."

Why it matters: Louisiana's premium-tax structure, participants said, affects household insurance costs, state revenue and the market for municipal bonds that cities and parishes use to finance local projects. Task force members repeatedly framed the issue as a tradeoff between lowering costs for policyholders and preserving revenue that supports general-fund programs and a series of dedicated funds (fire marshal, municipal police/fire retirement and others).

Key facts and figures discussed at the meeting: Department of Insurance staff said investment tax credits claimed from 2022'24 totaled roughly $283 million. Staff also reported about $2.6 billion of qualifying bonds held by insurers in 2024, roughly 50% of qualifying Louisiana investments on that schedule. The department said roughly 60 companies took investment tax credits in recent years (about 45 property-and-casualty carriers and 15 life/health carriers); of the 45 P&C companies, roughly 20 were Louisiana domestics and 25 were foreign subsidiaries or non-domestics.

Task force members and witnesses also gave specific revenue and collection figures for planning: the Louisiana Municipal Association said its centralized collections for 252 municipalities totaled about $28 million; Department of Insurance staff estimated roughly $600 million flowing to the state general fund from premium taxes after certain exclusions (excluding the Medicaid/HMO portion). Staff noted the retaliatory-tax mechanism has a statutory cap that the department applied in prior calculations.

Local officials urged caution. Richard Williams of the Louisiana Municipal Association said, "Every municipality gets something from this tax and they rely on it," and asked that any change preserve the municipal portion of the tax or provide replacements. Department staff and task force members said they intend to examine municipal and other dedicated collections (fire marshal, firefighter training and other add-ons) to determine whether those streams could be consolidated, replaced or otherwise insulated if the premium tax rate is changed.

The task force set a short list of analyses to be prepared before the next meeting: an updated model showing premium-tax reductions at multiple levels and the corresponding retaliatory-tax receipts; a fiscal-impact estimate of premium-tax reductions on state revenue; a proposed "off-ramp" model for companies (how reductions in credits would phase in as tax rates decline); a survey of other states' investment tax credits focused on P&C insurers; a breakdown of the full set of insurance-related tax collections and their destinations (with attention to municipal receipts); and a compilation of other states' effective tax rates after credits.

Task force members also discussed whether to treat P&C only or to include life and health lines; the group directed staff to start with P&C and expand later if needed. Several members emphasized the committee's stated objective: design changes that lower policyholder costs by simplifying and reducing the effective tax rate while avoiding abrupt harm to domestic insurers that maintain Louisiana operations.

The motion to request the six items passed without recorded opposition. The chair asked Dr. Berry and Department of Insurance staff to produce updated numbers and said she and staff would coordinate with legislative fiscal staff and municipal representatives ahead of the next meeting.

The task force did not adopt any legislative text at the meeting; it requested analyses and data to inform future policy options.