AIA Proposes New Tax Incentives to Bring Jobs To Colorado

On Aug. 24, the American Insurance Association (AIA) testified before the Colorado Commission on Taxation, urging the group to consider a proposal that would provide insurers with a credit against premium taxes for salaries paid to Colorado-based insurance company employees.

AIA believes adoption of this proposal is necessary to make the Colorado insurance tax system more competitive with other states and enhance the state’s overall economy.

Allan Stein, AIA vice president and tax counsel, noted that the regional home office (RHO) credit in current Colorado law was adopted in 1969 to provide an incentive for insurance industry jobs and investment. Stein stated that the law is now very antiquated and no longer efficiently serves these purposes.

Currently, qualification for the RHO credit depends on a subjective review of a complex range of business activities performed by an insurer in Colorado. However, according to Stein, the statute has failed to keep pace with the increasing role of technology and centralized operations in the property and casualty insurance industry.

The RHO credit, for example, depends on proof that the insurer prices premiums from the RHO; however, much of this type of activity, particularly for personal lines of insurance, is now done via Internet-based technologies. Moreover, RHO credits are “all-or-nothing, closed-book credits.”

AIA is also participating on a task force recently established by the Colorado Insurance Division in order to improve administration of the RHO credit and also to consider legislative recommendations.

Stein explained that in the longer term, a redesigned salary credit for Colorado would simplify tax administration and compliance as well as help provide insurance industry job growth in the state while stabilizing and even increasing state and local tax revenues.

Topics Talent Market Colorado