WA officials push for P&C insurance tax increase despite opposition

WA officials push for P&C insurance tax increase despite opposition | Insurance Business

WA officials push for P&C insurance tax increase despite opposition

Washington state legislature is pushing for the creation of a fund to help pay for wildfire damages – but local insurers aren’t too happy about how they want to raise the funds as the plan would necessitate an increase in P&C insurance taxes.

Last month, Commissioner of Public Lands Hilary Franz and state Senate Democrats proposed to increase the tax on premiums for P&C insurance. Legislators said the tax is necessary to raise $62.5 million annually, which will be used to pay for wildfire suppression and prevention.

“Never before have we faced a wildfire crisis of this magnitude,” Franz said during a recent Senate committee. “And one way or another, we are going to pay for our wildfires and dying forests. The question is whether we are going to pay to react as we deal with smoke and flames, or pay to be proactive.”

But Washington’s insurance industry has resisted against the proposal, reasoning that the plan could lead to a 20% tax increase.

To this accusation, Franz argued that over 2.2 million homes in Washington are vulnerable to wildfire. To fight fires for these exposed homes, the state has spent an average of $153 million per year over the past five years.

“It's getting harder to keep our communities and our firefighters safe,” she added.

The Associated Press reported that under Franz’s plan, the tax on P&C insurance premiums would increase from 2% to 2.52%. The commissioner explained that the increase would cost the average household less than $2 a month.

The tax will apply to all types of P&C insurance, including renters, vehicles, and medical malpractice.

During the Senate committee meeting, a representative of the group Professional Insurance Agents of Washington said that insurance buyers are “very price sensitive” and just a few additional dollars added to the cost could scare then away.