Printer-friendly version
By Miriam Raftery
January 23, 2018 (Sacramento) — The federal tax reform measure recently enacted reduces the corporate tax rate from 35 percent to 21 percent. California Insurance Commissioner Dave Jones observes, “That means that nationally insurers will now be able to retain even more of policyholder premiums as profit. However, in California the prior approval process that applies to property and casualty insurance rates limits insurer profits.”
As a result, Jones says he has directed his staff to commence a regulatory review of these insurers' rates given the major tax windfall under the new federal tax rules.
“I have also directed staff to consider and identify possible actions in other lines of business where insurers will benefit from the tax cut to see if we can enable their policyholders to also benefit from the lower corporate taxes paid by their insurers."
That could mean reduced rates for some policy holders of policies for insurance on vehicles, health, homes, businesses and more.
Some insurers may argue, however, that they have been hard-hit by large pay-outs for damages from unprecedented major disasters including wildfires and mudslides in California, so it remains to be seen just how much of the tax windfall, if any, will be passed along to consumers.
Recent comments