Louisiana study group opens review of insurance premium tax; Chance Henry elected chair

A legislative study group convened to review Louisiana's insurance premium tax structure and elected Rep. Chance Henry to chair the panel, members said, after an overview by Department of Insurance staff showing premium tax collections rose sharply from about $914 million in fiscal 2019 to roughly $1.4 billion in 2024.

The panel, created to "evaluate the state's overall insurance premium tax structure and develop recommendations for reforms," opened with a presentation from the Department of Insurance on revenue sources and how credits are applied, and discussed next steps including a request for a University of Louisiana at Monroe study and a potential rule to show the premium tax on policy billing, members said.

Why it matters: Premium taxes are a major revenue source for Louisiana and fund both the general fund and dedicated accounts such as Medicaid-related payments to the Louisiana Department of Health (LDH). Lawmakers and industry representatives told the group that complex credits and multiple municipal and state levies make the system difficult to administer and to explain to consumers.

Department of Insurance presentation and key numbers

Lance Heron, deputy undersecretary, Louisiana Department of Insurance, summarized collections and credits and said, "The Department of Insurance is the third largest revenue collector for the state, bringing in 1,600,000,000.0 with 1,400,000,000.0 of that being premium taxes." He described a rise in collections since 2019 and a breakdown of major contributors, attributing the largest single dedicated amount to Medicaid-related managed care organizations.

Heron and Department staff reported that: taxable premium in the state exceeded $42 billion; gross tax liability before credits was reported as approximately $1.63 billion and, after credits, net tax about $1.29 billion (figures reported by LDI and provided to the study group); Medicaid-enrolled managed care organizations generated roughly $716.8 million to $787 million dedicated to LDH in calendar 2024; surplus lines, fire and casualty,…