(The Center Square) – Louisiana lawmakers are moving forward with proposals they say could help reduce the cost of insurance in the state, which has some of the highest rates in the country.
On Monday, the House Ways and Means Committee heard testimony on three bills targeting changes to the way insurers are taxed and credited.
House Bill 475 by Rep. Gabe Firment, R-Grant, would raise the annual cap on credits for retaliatory taxes paid to other states from $9 million to $25 million and extend the program’s expiration date from the end of 2029 to the end of 2034.
Under current law, Louisiana grants refundable credits to in-state insurers that are charged higher taxes while doing business elsewhere.
A companion bill, HB516 by Rep. Chance Henry, R-Acadia, proposes a broader overhaul of the state’s insurance premium tax structure. Henry’s bill would replace the current sliding scale for taxing fire, marine, transportation, casualty, and surety insurance policies with a flat 1.6% rate on gross annual premiums beginning in 2026.
“Louisiana’s tax code is fairly convoluted with a myriad of credits and exemptions,” Henry told the committee. “The premium tax is no different. This bill strives to simplify things by moving to a flat rate and repealing certain credits and exemptions.”
The legislation would repeal multiple tax credits, including the Insurance Premium Investment Tax Credit and the long-standing Capital Companies Tax Credit Program, while preserving local tax exemptions for qualified Louisiana investments. Insurers would also be required to clearly itemize premium taxes on policy documents.
A set of 13 amendments to HB516, described as largely technical, was adopted by the committee. Notably, the amendments would allow for future reductions in the premium tax rate. Starting in 2027, the tax rate could drop by 0.2% each year if collections from premium and retaliatory taxes surpass 2024 levels.
The amendments also limit the Insurance Premium Investment Tax Credit to health maintenance organizations and insurers that maintain substantial operations and employment in Louisiana.
Another significant change reverses part of the original bill’s repeals, restoring the insurance premium tax credit for retaliatory taxes to current law — a move aimed at maintaining incentives for Louisiana-based insurers competing in other states.
However, questions about the potential financial impact of the changes remain. Henry acknowledged that the Legislative Fiscal Office has not yet updated the bill’s fiscal note to reflect the amendments. Lawmakers expect further review once the bill reaches the House Appropriations Committee.
“We know we have one of the highest premium tax rates in the country,” Henry said. “By lowering that rate, we believe we will not only make insurance more affordable here but also increase our ability to collect retaliatory taxes from other states that have higher rates.”
The committee advanced both bills.