Illinois lawmakers voted to override Gov. Bruce Rauner’s veto of legislation that:
– reduces the premiums tax rate on industrial insureds; and
– establishes new minimum capital and surplus thresholds for captive insurance companies.
What Is an Industrial Insured?
An “industrial insured” is an insured that:
– employs or regularly consults with a qualified risk manager to buy insurance;
– buys insurance directly from an unauthorized insurer; and
– is an exempt commercial purchaser whose home state is Illinois.
How Much Is the Rate Reduction?
The legislation reduces the rate of tax from 3.5% to 0.5% of the gross insurance premiums. Industrial insureds must also pay a fire marshal tax of 1%.
When Does the Rate Reduction Take Effect?
The rate reduction applies to insurance contracts effective January 1, 2018 or later.
When Is the Tax Due?
An industrial insured must pay the gross premiums and fire marshal taxes within 30 days after it must report the insurance contracts to the Illinois Surplus Lines Association.
(S.B. 1737), Laws 2018, effective November 27, 2018 and as noted