Insurance Law

Insurers Moving to New Hampshire

Insurers looking to New Hampshire to domicile their company will find a postitive regulatory climate, favorable tax laws and potential adminstrative efficiencies.

March 2015

By Donald J. Pfundstein*

I recently had the opportunity to assist a property and casualty insurer redomesticate from another New England state to New Hampshire. The insurer was already licensed in the Granite State. It is also the member of a group which has a domestic property and casualty company well established here. Since the redomesticated company was already licensed in New Hampshire, it was able to file only the redomestication elements of the UCAA Primary Application.  In short, the process is streamlined for a licensed company compared to a company not already licensed in the new state of domicile.

New Hampshire's Favorable Climate (for Insurers)

When reviewing whether a change in domicile makes sense, company executives consider a number of important factors. Most will tell you that they start with the regulatory climate in the proposed, new domestic state. What is it like doing business with the Department of Insurance? New Hampshire is fortunate to have a Department which is well led and managed across all bureaus.  Department staff are very accessible, knowledgeable and helpful. In short, the regulatory climate is positive.

Insurance executives will also consider the premium tax effect of transferring a company’s domicile. New Hampshire has a premium tax ratio of 1.25% on property and casualty and life lines of business. Over time an insurer could save meaningful sums due to the use of retaliatory taxation by the various states. An insurer always pays to the market state the premium tax rate of the market state or domestic state, whichever is greater. For example, if your company pays 2% to its domestic state, it will also pay at least 2% in every other state including where the rate of the premium tax is as low as New Hampshire’s 1.25%. Moving to a low rate state can save money by minimizing the effect of retaliatory taxation.

A company may desire to transfer its domicile to a domestic state where other affiliate insurers are domesticated or move several affiliates to the new state. This can greatly simplify the administrative, corporate and regulatory affairs of all the companies. Redomestication in this context should also make regulatory oversight of the companies more efficient.  

Making the Move: Step by Step

Assuming you’ve decided to come to the Granite State, here’s generally how to get it done. Before you are able to submit an application, you must first meet with the New Hampshire Department of Insurance and explain the reasons for the redomestication and your business plan. If you are not already licensed here, be prepared to review management, financials, risk-based capital status and your general regulatory reputation. Don’t forget to check in with the current domestic regulator to avoid any surprises. Additionally, you’ll need to learn the current domestic state’s process for your intended transfer of domicile. That could range from a simple “no objection” letter to a complete hearing process and order. 

If your company is not currently licensed here, you will need to file a complete UCAA Primary Application assuming you first get the green light from the Department. Don’t overlook the need to file UCAA corporate amendment applications to amend existing Certificates of Authority in the jurisdictions in which your company is licensed.

You will also need to take a number of corporate steps. Amended and Restated Articles of incorporation are necessary. You need appropriate corporate approvals and may need to amend your bylaws as well. The New Hampshire Department will want to see the board resolutions. The Commissioner must approve the changes to your articles, so the corporate “kit” you file with the UCAA application consists of final drafts, not the final corporate actions. There likely will be questions and requests for further information or documentation as the Department staff reviews your application. If you receive final approval, the Department will handle filing with the Secretary of State’s office. The original, final Amended and Restated Articles together with the securities form and the Department’s order of approval will go to the Secretary of State from the Insurance Department.

Subsequent to finalization of the redomestication, you’ll likely want the former domestic state to license your company as a foreign insurer. You’ll need to learn the process for that as well. There may also be the need to update the corporate public records in the former domestic state.

There are a number of other issues which need to be evaluated on a case-by-case basis, but this article gives you a starting place.

To learn more about moving an insurance company to New Hamsphire, please contact the author directly.

See more information on the requirements for redomestication to NH and redomestication of a foreign company detailed on the NH Insurance Department website.

*Donald Pfundstein is admitted in New Hampshire.

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