Provisions of Am. Sub. H.B. 66 Affecting the Insurance,
Banking and Financial Services Industry

Faith Williams
Bricker & Eckler LLP
July 2005

Am. Sub. H.B. 66, Ohio’s biennial budget and tax reform legislation, includes several provisions of interest to insurance companies, financial institutions, and dealers in intangibles (“DITs”).

Taxes. While H.B. 66 makes significant changes to the tax system applicable to most corporations doing business in Ohio, insurers, banks, and DITs generally will continue to be taxed under their special tax systems. Two documents of assistance on this topic include: Summary of Ohio's Commercial Activity Tax and Other Ohio Tax Reform and Ohio Commercial Activity Tax and Insurance Companies, Financial Institutions, and Dealers in Intangibles. Note that holding companies are now subject to Ohio’s new Commercial Activities Tax (“CAT”).

H.B. 66 also eliminates the "employer-insured" exemption for certain excess and surplus lines coverages. The exemption previously allowed insureds that had a risk manager, premium exceeding $25,000 and 25 employees to avoid the premium tax. Now the insured must qualify under other more restrictive exemptions. 

Ohio’s Job Creation Tax Credit – previously unavailable to insurance companies – was extended to insurers.

(All tax provisions are effective July 1, 2005.)

Certificates of Compliance. Certificates of compliance for insurance companies have been eliminated; all related sections of the Revised Code have been repealed. Most importantly, H.B. 66 repeals Ohio’s antiquated law requiring each foreign insurer to annual publish a copy of its certificate of compliance in each county in which it has a licensed agent. (Effective October 1, 2005.)

Notification of Out-of-State Disciplinary Action. H.B. 66 repeals the requirement that insurers notify the Ohio Department of Insurance within 30 days of a formal action being taken by an insurance regulator in another state. (Effective Oct. 1, 2005.)

Health Insurance Purchasing Pools for Public Schools. H.B. 66 implements preliminary steps toward establishments of a centralized system through which all public school employees would get access to health insurance benefits. The new law creates a Board to hire an independent expert to study and make recommendations on implementation of school district employee health care benefits pooling. However, the pooling system can only be implemented if subsequent legislation is adopted.