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, and life/health lines each accounted for material shares of overall collections; and total investment tax credits used in 2024 were reported at about $283 million. Heron warned the figures were high-level and said the department would provide detailed numbers to the committee on request.

Investment tax credits and how they work

Panelists discussed the investment tax credit, which reduces premium tax liability when insurers hold qualifying Louisiana investments. Heron summarized qualifying assets: state or municipal bonds approved by the Louisiana State Bond Commission, mortgages and loans on in-state property, and equity in corporations domiciled in the state. He described the tiered credit structure as explained to the committee: meeting a roughly one-third threshold of qualifying investments, insurers can reduce about 95% of their gross tax liability; lower thresholds produce smaller credits.

Mark Carter, representing the Louisiana Insurers Conference and identified as founder and CEO of Coast States Insurance Company, said the credit structure is a major driver of insurers' asset allocation and observed that many companies invest in municipal bonds to obtain the credit.

Retaliatory taxes, municipal levies and other add-ons

Members discussed retaliatory taxes (charges other states levy when Louisiana's nominal insurance rates exceed theirs), municipal premium taxes, and smaller dedicated fire-related levies. Heron said retaliatory collections were minimal in recent reporting and that municipal premium taxes are administered at the municipal level, with insurers required to report premiums by municipality to LDI for remittance.

Representative Richard Nelson, Louisiana secretary of revenue, and several members noted the combined effect of state gross rates, credits and municipal levies contributes to both administrative burden for insurers and opacity for consumers about what portion of a premium goes to taxation.

Who benefits and who pays

Discussion repeatedly returned to whether lower gross tax rates or reduced credits would benefit consumers or insurers. Several participants, including Corey Harvey, board chairman of the Life and Health Insurance Guaranty Association and vice president at Blue Cross Blue Shield of Louisiana, described how companies build expected effective tax rates into rate filings. Harvey said for his company, removing the credit would translate to an "across the board rate increase" of about 3 percent, adding that effective tax rates are factored into pricing.

Dissenting or qualifying points

Speakers warned the committee that changes would create winners and losers among insurers. Heron and others cautioned that lowering credits could change insurer investment behavior and might reduce demand for municipal bonds; industry speakers said insurers holding qualifying investments accept lower yields because the tax credit offsets the return gap. Committee members recommended commissioning a new analysis of retaliatory taxes and of how effective tax rates compare with other states to better estimate fiscal and market impacts.

Requested work and next steps

The group agreed to request academic support and additional data: members moved to invite Christine Berry of the University of Louisiana at Monroe to present a retaliatory-tax study at a future meeting, a motion made from the floor and approved without recorded objection. LDI agreed to provide the detailed figures presented at the meeting.

Representative Chance Henry, who was nominated and confirmed as chair during the meeting, said the committee's goal is to produce proposed legislation for the 2027 fiscal session and to clear up the system so consumers see better transparency. Henry said, "The goal of this committee going forward is to have proposed legislation going into the 2027 fiscal session to address this issue," and indicated an intent to move quickly to hold additional meetings before the fall and holiday calendar.

Administrative and transparency items

Members noted that a Sen. Talbot bill passed in the recent session will require insurers to provide rate transparency reports at renewal beginning in 2027; Adam Patrick, deputy commissioner of policy innovation and research, mentioned that report requirement as a related transparency measure under development. Representative Henry said he had discussed with the commissioner the possibility of promulgating a rule to require companies to list the premium tax as a line item on policy billing ("deck page"). The commissioner committed to pursuing rulemaking to consult with insurers on how to implement line-item disclosure.

Formal actions recorded

- The committee elected Rep. Chance Henry (District 42) as chair by unanimous consent or no recorded objection. (Nomination moved on the record; no roll-call vote recorded.)
- The committee voted without recorded objection to invite Christine Berry (University of Louisiana at Monroe) to present a retaliatory-tax study at a future meeting (motion made by Mark Carter).
- LDI agreed to provide the detailed numbers presented at the meeting to committee members.
- The meeting concluded with an adjournment motion approved by the group.

What the record does not show

No formal bill was introduced or amended during this meeting; no vote on legislation occurred. Several figures presented were described by Department staff as high-level and attendees requested the full data set be distributed before subsequent meetings. Where transcript figures were given off the top of a presenter's head, speakers cautioned the committee not to treat those verbal estimates as final without the detailed data LDI offered to circulate.

Looking ahead

Members said they will seek targeted comparative data from neighboring states, request the ULM retaliatory-tax analysis, and hold additional meetings this summer and fall with the goal of drafting legislation for the 2027 session. The committee also discussed pursuing administrative rulemaking to improve consumer-facing transparency around premium taxes.

(Reporting based on presentations and verbatim remarks at the study group meeting; quotes and attributions are taken from the meeting transcript and are identified below.)