LEGISLATIVE FISCAL OFFICE
Fiscal Note
Fiscal Note On: HB 511 HLS 23RS 765
Bill Text Version: ENROLLED
Opp. Chamb. Action:
Proposed Amd.:
Sub. Bill For.:
Date: June 9, 2023 7:16 AM Author: ILLG
Dept./Agy.: Insurance
Subject: Increases allowable annual LIGA assessment to 2% Analyst: Deborah Vivien
INSURANCE EN SEE FISC NOTE GF RV See Note Page 1 of 1
Provides relative to the Louisiana Insurance Guaranty Association
Current law authorizes the Louisiana Insurance Guaranty Association (LIGA) to annually assess insurers to fund LIGA
obligations in an amount up to 1% of premiums sold in the state in the prior calendar year. Current law allows for a non-
refundable premium tax credit in the amount of the 100% LIGA assessment to be taken over ten years. The credit must be
taken in the year in which the credit is paid. Insurers may choose to pass the assessment through to ratepayers or claim the
premium tax credit, but not both.
Proposed law increases the maximum percentage for the annual LIGA assessment from 1% to 2% of the preceding calendar
year premiums written beginning prospectively on January 1, 2024. Proposed law limits the non-refundable premium tax
credit to up to half of the maximum assessment. Proposed law repeals the provision allowing a reduced current year LIGA
assessment payment if the prior year tax liability is less than the LIGA credit.
EXPENDITURES 2023-24 2024-25 2025-26 2026-27 2027-28 5 -YEAR TOTAL
State Gen. Fd. $0 $0 $0 $0 $0 $0
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total $0 $0 $0 $0 $0 $0
REVENUES 2023-24 2024-25 2025-26 2026-27 2027-28 5 -YEAR TOTAL
State Gen. Fd. SEE BELOW SEE BELOW SEE BELOW SEE BELOW SEE BELOW
Agy. Self-Gen. $0 $0 $0 $0 $0 $0
Ded./Other $0 $0 $0 $0 $0 $0
Federal Funds $0 $0 $0 $0 $0 $0
Local Funds $0 $0 $0 $0 $0 $0
Annual Total
EXPENDITURE EXPLANATION
There is no anticipated direct material effect on governmental expenditures as a result of this measure. Department of
Insurance indicates that the requirements in the bill can be accommodated with current resources.
REVENUE EXPLANATION
LIGA determines an amount each year to assess insurers writing policies in the state to cover claims that are transferred to
LIGA when an insurance company can no longer cover its obligations. The proposed bill will allow LIGA to assess up to an
additional 1% of premiums each year. Insurance companies paying the assessment become eligible for a premium tax credit
of 100% of the LIGA assessment taken in equal installments over 10 years, though they may opt instead to pass the costs
through to the ratepayers. While the bill increases the maximum allowable assessment to 2%, it limits the
premium tax credit to half of the maximum allowable credit or 1%, which is the same state fisc exposure as
current law. The bill appears to ensure that the newly authorized assessment will be borne by the ratepayers.
The currently authorized assessment of up to 1% would presumably operate in the same manner as current law with the
insurers having the option to take 10 years of premium tax credits or immediately pass the assessment cost through to
ratepayers.
However, the bill does not mandate an annual assessment; it merely authorizes an increase in the maximum assessment
beginning in CY 2024. The decision to levy an assessment on insurers lies solely with LIGA. From testimony, it appears
evident that the new assessment will be levied to pay on-going LIGA obligations.
The provision in the bill repealing the allowance of a reduced LIGA payment due to insufficient liability against LIGA credits
can only serve to increase LIGA collections, though the amount is indeterminate at this time and speculative. The LIGA
assessment only recently commenced so the need for the offset is not certain. Any use of the offset would be predicated on
future net premium tax liabilities, which are unknown.
Currently, LIGA is assessing a premium of 1% annually, which is pledged to $600 M bonds, which were sold in FY 22 to allow
for more timely payouts of LIGA claims. The premium tax credit arising from the current LIGA assessment will offset state
general fund by about $10-11 M per year, peaking at about $110 M-$120 M in FY 32, assuming insurance premiums remain
relatively constant. It is expected that annual assessments will continue through the life of the bonds or about 2037.
Senate Dual Referral Rules House
13.5.1 >= $100,000 Annual Fiscal Cost {S & H} 6.8(F)(1) >= $100,000 SGF Fiscal Cost {H & S}
Alan M. Boxberger
13.5.2 >= $500,000 Annual Tax or Fee 6.8(G) >= $500,000 Tax or Fee Increase
Change {S & H} Interim Legislative Fiscal Officer
or a Net Fee Decrease {S}


Statutes affected:
HB511 Original: 22:2055(6), 22:2056(C)(2), 22:2058(A), 22:1(A), 22:2062(A)(1), 22:2062(A)(2)
HB511 Engrossed: 22:2055(6), 22:2056(C)(2), 22:2058(A), 22:1(A), 22:2062(A)(1), 22:2062(A)(2)
HB511 Enrolled: 22:2055(6), 22:2056(C)(2), 22:2058(A), 22:1(A), 22:2062(A)(2)
HB511 Act : 22:2055(6), 22:2056(C)(2), 22:2058(A), 22:1(A), 22:2062(A)(2)