HCS SCS SB 385 -- WORKERS' COMPENSATION

SPONSOR:  Scott (Luetkemeyer)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Financial
Services by a vote of 16 to 0.

This substitute changes the premium tax charged on the discounted
portion of high-deductible workers' compensation polices to an
"administrative surcharge."  Under current law, this premium tax
results in retaliatory taxes being imposed in other states upon
Missouri-based insurers doing business in those other states.  A
late-payment charge of 0.5% will apply to late payments of the
surcharge and interest for late payments will accrue at a rate of
1.5% for each month the payment is delinquent.  Records required
to be filed with the Division of Workers' Compensation pursuant
to this law will be closed records.  The substitute does not
apply to self-insureds.  The division will start collecting the
surcharge on January 1, 2004.

FISCAL NOTE:  Cost to Insurance Dedicated Fund of $47,373 in FY
2004, $0 in FY 2005, and $0 in FY 2006.

PROPONENTS:  Supporters say that by changing the tax to a
surcharge, the bill as it passed the Senate evens the playing
field for Missouri-based insurance companies that sell insurance
to employers in other states.

Testifying for the bill were Senator Scott; and Safety National
Casualty Corporation.

OPPONENTS:  Those who oppose the bill say that it will have
unintended consequences.  Premiums taxes are used to fund the
Division of Workers' Compensation.  When those costs increase, so
will the tax, which will force the insurers to charge more for
premiums.  The net effect will be an increase in the costs to
Missouri employers who use a workers' compensation carrier from
outside the State of Missouri.  Those increased costs put these
employers at a competitive disadvantage.

Testifying against the bill were American Insurance Association;
and David Klarich.

Richard Smreker, Senior Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:13 am