New Hampshire Legislature Passes Several Bills that Affect Insurance Industry

Donald J. Pfundstein
Published on : 2006-06-05

During any legislative session, the New Hampshire Legislature considers numerous bills that have the potential to impact the insurance industry. Here is a brief summary of several bills that were passed during the 2006 legislative session that insurers should be aware of.

Insurance Premium Tax. As reported on this website, HB678 reduces the premium tax from 2% to 1% for property, casualty and life insurers. The premium tax reduction will be phased in over several years. The first reduction is effective as of July 1, 2007. At that time, insurers will be required to pay a premium tax of 1.75%. The premium tax will be further reduced over the next four years, with insurers paying a premium tax of 1.5% as of January 1, 2009, 1.25% as of January 1, 2010, and 1% as of January 1, 2011.

HB678 also includes an accelerated payment mechanism which represents a change in the way insurers have paid their premium tax in the past. Rather than making quarterly payments, insurers will now be required to make an estimated premium tax payment in full by March 15 of each year.

This bill is effective as of
August 1, 2006.

Property and Casualty Insurance. HB1192 makes technical changes to the laws governing the regulation of property and casualty insurers. For example, HB1192 adds the word “transmit” or “transmitted” to several statutes thereby permitting insurers to either file or transmit charter documents, articles of amendment and annual financial statements to the New Hampshire Insurance Department (“NHID”).

HB1192 also amends RSA 400-B:7, which requires property and casualty insurers to maintain complaint logs. In addition to the information already required to be recorded on a complaint log, HB1192 also requires property and casualty insurers to note the time it took to process each complaint on the log that is submitted annually to the NHID.

This Bill is effective as of
July 30, 2006.

Identity Theft. HB1660 addresses the ongoing concern over identify theft. HB1660 applies to any corporation doing business in New Hampshire that owns or licenses computerized data that contains personal information. Therefore, HB1660 likely applies to all insurers doing business in New Hampshire.

In the event of a security breach, any insurer to which HB1660 applies is required to notify the affected individuals of the security breach if it is determined that misuse of the information has occurred or is reasonably likely to occur. In addition to notifying affected individuals, HB1660 requires insurers to notify the NHID.

Most importantly, if an insurer maintains procedures for security breach notification pursuant to laws or regulations issued by the NHID, the insurer would be deemed “in compliance” with HB1660 if it acts in accordance with such laws or regulations. This “exception” results in regulation of insurers by the NHID rather than the Attorney General.

This bill is effective as of
January 1, 2007.

Workers’ Compensation for Out-of-State Employers and Employees. SB265 requires out-of-state employers doing business in New Hampshire to carry workers’ compensation coverage. SB265 also repeals RSA 281-A:5-e which exempted certain out-of-state employers from carrying workers’ compensation insurance.

This bill is effective as of
July 14, 2006.

Flood Insurance. HB1330 is especially timely in light of the recent flooding in New Hampshire. This Bill authorizes municipalities to adopt floodplain ordinances as part of their enrollment in the National Flood Insurance Program. HB1330 also ratifies floodplain ordinances that were previously adopted in many New Hampshire cities and towns. Furthermore, if a municipality has enrolled in the National Flood Insurance Program, HB1330 requires special flood hazard areas to be designated on flood insurance rate maps issued by the Federal Emergency Management Agency.

This bill became effective on
May 25, 2006.

Third Party Administrators. SB391 amends RSA 402-H, the Third Party Administrators Law. SB391 amends the certificate of authority requirements for third party administrators and requires third party administrators to include audited financial statements with their annual reports. SB391 also adopts confidentiality and information sharing provisions that are similar to those contained in RSA 400-A:37, which regulates the examination of insurers by the NHID.

This bill is effective as of
August 8, 2006.

If you have any questions about how these bills impact you, please call Donald Pfundstein at (603) 545-3600.

*Donald Pfundstein is admitted in New Hampshire.