House panel weighs capping insurer-credit offsets at $10 million, extending insurer carryforward period

The House Ways and Means Committee spent the morning debating House Bill 1194, a proposal to change how New Hampshire taxpayers and insurers share the financial consequences when an insurance company becomes insolvent.

Deputy Commissioner Keith Nye of the New Hampshire Insurance Department told the panel the state—urrently allows insurers that front insolvency payments to recover those costs via credits against the insurance premium tax over five years, typically at 20 percent per year. "All fully insured carriers in the state of New Hampshire are required to be part of the guarantee association," Nye said. "When a company fronts the losses for an insolvent company, the member companies are then reimbursed for the monies that they front over the next 5 years at a rate of about 20% per year." (Keith Nye, Deputy Commissioner, Insurance Department)

Nye and department staff said HB 1194 as introduced would cap the state's annual IPT exposure from those credits at $10 million. If assessments in any year would otherwise trigger credits above that cap, the department's draft would reduce the insurers' reimbursement rate for that year (for example, from 20 percent to 10 percent), effectively sharing more of the catastrophic cost with insurers and preserving state revenue and budget predictability.

Industry representatives including Jill Rickard of the American Council of Life Insurers urged the committee to permit insurers to carry unused credits forward for more than five years, arguing longer recovery windows avoid sudden premium increases for future customers. "We're asking...instead of losing half of the credit, we'll take it over a period of longer time so that the state's liability is limited to $10,000,000 in any 1 year," Rickard said.

Committee members pressed both sides on practical consequences for small, domestic and nationally owned carriers. The department warned that under some scenarios small carriers that write little taxable life business could take decades to realize credits if credits are limited annually by tax liability; one example in committee testimony suggested extreme, unrealistic cases could stretch carryforwards very long without legislative adjustment.

After extended questioning, the chair took a show of hands and said a majority of the committee expressed support for a working compromise: retain a $10 million annual cap for the IPT, extend the recovery window to 10 years (instead of the current five) and remove the automatic inflation adjustment. The committee did not adopt final language but asked Representative Murphy and department staff to draft an amendment for a future executive session so the committee could consider an "OPTA" (amendment) that captures those points.

What happens next: The chair said staff will draft the amendment and schedule an executive session where the committee will vote on a specific amendment and potential OTPA recommendation. Department staff said they will provide additional charts and implementation details to help lawmakers finalize a balanced compromise.

Key quote: "When when the assessment breaches $10,000,000 in a given year, that's when we're asking the carriers to no longer take a 20% offset, but a 10% offset," Nye said, explaining the practical effect of the cap in the department's draft.

Status: No final vote; committee asked for a written amendment and scheduled a follow-up executive session.