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| Wed Oct 15 2008 7:50 PM | |
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Franklin County government " trying to collect its share of insurance premium taxes it claims has disproportionately gone to the city " has filed 14 lawsuits against more than 65 insurance companies.
The action is to "remedy violations of state law and local ordinance in connection with defendants' collective misconduct in the failure to remit insurance premium taxes" to Franklin County, the lawsuits claim.
The suits in U.S. District Court in Frankfort seek to examine the accounting books of the insurance companies to determine if they have "remitted all taxes" owed for years to county government.
The county also seeks interest and penalties for all delinquent amounts owed, plus costs and attorney fees.
County Attorney Rick Sparks told Fiscal Court, in Friday's work session, the suits were filed electronically on July 12-14. Frankfort attorney Kyle Thompson " who has been working on collections for Fiscal Court since February " filed the suits.
In Thompson's agreement with Fiscal Court, he would receive 25 percent of whatever is collected, but would not be paid if nothing is collected.
After Friday's meeting, Sparks said, "We're trying again to follow up on the question of whether (insurance companies) are making the proper payments to the city or county."
Sparks said nobody knows how much tax money is still owed to the county "because we don't know the degree of the misallocations. And to add insult to injury, the state just passed a law that affects the county negatively.
"As of July 15 it reduced the window to go back on delinquent insurance premium tax to two years" as opposed to five years previously.
Sparks said former Judge-Executive Bob Roach did a great job of contacting the insurance companies.
"They all recognized there was a problem but no one would say we're willing to solve the problem, or we know the answer to the problem," Sparks said.
Franklin County tried to get separate zip codes for the city and the unincorporated areas of the county, which would have basically solved the problem, Sparks said.
"But that fell on deaf ears," he said.
In 2006 Fiscal Court began getting a larger share of the insurance premium tax, which because of insurance company errors had gone disproportionately to the city treasury.
Roach, just before leaving office in December 2006, said Fiscal Court had recouped $600,000 and he expected the amount to increase to well over $1 million.
In February of this year, Fiscal Court had recovered more than $1 million, according to Debra Anderson, occupational tax coordinator for the county.
In 2005 the state Office of Insurance agreed to audit five insurance companies. Then Roach sent 331 letters to companies explaining the unfair division of tax money. He enclosed in each letter a computer disk with a listing of all property addresses located in the unincorporated part of Franklin County.
"Your obligation is to review the insurance premium tax payments for Frankfort and Franklin County for the past five years, make restitution for errors, and insure future premium tax payments are divided with the appropriate share being paid to Franklin County," Roach's letter said.
The claims made in the lawsuits give only Franklin County government's side of the case.
Defendants named in the lawsuit include:
>American International South Insurance Co., Harrisburg, Pa.
>AIG Casualty Co., Harrisburg, Pa.
>American General Assurance Co., Schaumburg, Ill.
>American General Life Insurance Co., Houston, Texas.
>American General Life & Accident Insurance Co., Nashville, Tenn.
>Commerce & Industry Insurance Co., New York, N.Y.
>Granite State Insurance Co., Harrisburg, Pa.
>Illinois National Insurance Co., Chicago.
>Insurance Co. of the State of Pennsylvania, Harrisburg, Pa.
>National Union Fire Insurance Co. of Pittsburgh, Harrisburg, Pa.
>New Hampshire Insurance Co., Harrisburg, Pa.
>United Guaranty Residential Insurance Co., Greensboro, N.C.
>Hartford Steam Boiler Inspection & Insurance Co., Hartford, Conn.
>Union Security Insurance Co., Des Moines, Iowa.
>American Bankers Insurance Co. of Florida, Miami.
>American Bankers Life Assurance Co. of Florida, Miami.
>American Memorial Life Insurance Co., Rapid City, S.D.
>American Security Insurance Co., Wilmington, Del.
>American Reliable Insurance Co., Scottsdale, Ariz.
>Liberty Mutual Fire Insurance Co., Wausau, Wis.
>American Fire & Casualty Insurance Co., Fairfield, Ohio.
>LM Insurance Co., West Des Moines, Iowa.
>Indiana Insurance Co., Indianapolis.
>Liberty Mutual Insurance Co., Boston.
>Netherlands Insurance Co., Keene, N.H.
>Ohio Casualty Insurance Co., Fairfield, Ohio.
>West American Insurance Co., Indianapolis.
>Wausau Underwriters Insurance Co., Wausau, Wis.
>Nationwide Mutual Insurance Co., Columbus, Ohio.
>Nationwide Mutual Fire Insurance Co., Columbus, Ohio.
>Nationwide General Insurance Co., Columbus, Ohio.
>Owners Insurance Co., Lima, Ohio.
>Auto-Owners Insurance Co., Lansing, Mich.
>Progressive Casualty Insurance Co., Cleveland, Ohio.
>Progressive Direct Insurance Co., Cleveland.
>Progressive Northern Insurance Co., Cleveland.
>Shelter General Insurance Co., Columbia, Mo.
>Shelter Life Insurance Co., Columbia, Mo.
>Shelter Mutual Insurance Co., Columbia, Mo.
>State Auto Property & Casualty Insurance Co., West Des Moines, Iowa.
>State Automobile Mutual Insurance Co., Columbus, Ohio.
>State Farm Fire & Casualty Co., Bloomington, Ill.
>State Farm Life Insurance Co., Bloomington, Ill.
>State Farm Mutual Automobile Insurance Co., Bloomington, Ill.
>Travelers Property Casualty Insurance Co. of America, Hartford, Conn.
>Charter Oak Insurance Co., Hartford, Conn.
>Northland Insurance Co., St. Paul, Minn.
>Phoenix Insurance Co., Hartford, Conn.
>St. Paul Fire & Marine Insurance Co., St. Paul, Minn.
>Standard Fire Insurance Co., Hartford, Conn.
>Travelers Casualty & Surety Co., Hartford, Conn.
>Travelers Casualty & Surety Co. of America, Hartford, Conn.
>Travelers Home & Marine Insurance Co., Hartford, Conn.
>Travelers Indemnity Co., Hartford, Conn.
>Travelers Indemnity Co. of America, Hartford, Conn.
>Travelers Property Casualty Insurance Co., Hartford, Conn.
>Cincinnati Insurance Co., Fairfield, Ohio.
>Cincinnati Life Insurance Co., Fairfield, Ohio.
>Geico Indemnity Co., Chevy Chase, Md.
>Geico General Insurance Co., Chevy Chase, Md.
>Grange Mutual Casualty Co., Columbus, Ohio.
>Trustgard Insurance Co., Columbus, Ohio.
>Hartford Casualty Insurance Co., Indianapolis.
>Hartford Fire Insurance Co., Hartford, Conn.
>Hartford Insurance Co. of the Midwest, Indianapolis.
>Hartford Life and Accident Insurance Co., Hartford, Conn.
>Hartford Underwriters Insurance Co., Hartford, Conn.
>Property and Casualty Insurance Co. of Hartford, Indianapolis.
In other business Friday, Fiscal Court:
>Awarded a contract to E & H Bridge and Grating Inc., Bedford, Ind., to replace a bridge over Taylor Branch on Taylor Branch Road. It was the lower of two bids received " $53,944. The higher bid was $54,720.
County Road Superintendent said it will be a metal bridge and construction should begin in a month.
>Unanimously approved rezoning 20.5 acres at 100 Old Georgetown Road from Rural Residential to Agricultural. Michael and Andrea Mueller requested the zone change for a family home, farming and a nursery landscape business.
In May the county planning office recommended approving the rezoning and the Frankfort/Franklin County Planning Commission voted unanimously to approve it.
>Held the first reading of an ordinance to rezone 3.5 acres at 1437 Louisville Road from Rural Residential to Highway Commercial. The Stewart Miller Estate requested the change.
>Held the first reading of an ordinance to rezone 1.8 acres at 4241 U.S. 127 south from Rural Residential to Industrial Commercial.
Mary Belle Dailey, owner of the property, requested the change so her grandson, Jon Dailey, can expand a welding shop " that preceded zoning laws " and move it to another part of the farm.
>Voted to hire Laura Thompson as a crime victim's advocate for the commonwealth attorney's office.
>Voted to hire James Bowen as a county firefighter. He replaces Roger Peach, who resigned.
>Approved Judge-Executive Ted Collins' appointment of Joyce Honaker to a four-year term on the Frankfort/Franklin County Planning Commission. She will replace Darrell Sanderson whose term ended June 30.
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9 Total Comments
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9.
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Posted by coatty July 29, 2008
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perplexed - it depends on where the property you have insured is located . . . . if you live in the county (like me), you may have some property that is located in the city, or another city, or county, and vice versa. Under current law, the premium tax is based on WHERE the property insured is located not where the owner lives. For example, your house and car may be located in the county, but you may have a boat docked in the city (or another county). It gets confusing fast if you have property located in multiple localities. At the end of the day, though, your premium tax (for each policy) goes (or should go) to the locality in which the insured property is located (the situs of the property). Whether you live in the City or County, I recommend you check over your polic(ies). Since the city and county premium tax rates are the same, there is no additional tax due from us insureds. However, it may be going to the wrong government. If it is in error, let your agent know so they can correct it. good luck.
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8.
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Posted by perplexed July 24, 2008
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Rick, I have ten insurance policies, they all have a county surcharge on them. Can you tell where this money goes?
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7.
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Posted by coatty July 22, 2008
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skull1: Good question! The answer is that it is an issue of getting the biggest bang for Franklin County taxpayers' buck . . . Neither my office nor Fiscal Court has the staff or resources to pursue this case in-house. Given my prosecution duties, staff levels and obligations to Fiscal Court and the people of Franklin County, a case of this magnitude would take additional personnel and these are simply not available without spending large amounts of money.
By retaining outside counsel on a contract basis like this, the County gains additional resources, personnel, and staff at no cost to taxpayers, and without the County having to hire on payroll lawyers, paralegals, accountants, auditors, etc. As Mr. Bolton correctly identifies, this is a very complex issue. However, no one can argue against the need to try to make sure that all taxes (insurance premium or otherwise) are paid to the right governmental entity. And that is all this case is about - making sure and verifying that the money we pay on our insurance premium taxes goes to where it is owed, be it City or County. But . . . in this case, the only way to do that without spending any more taxpayer money is to seek outside counsel. Plain and simple, outside counsel provides that opportunity without the additional cost . . . a way to get the most bang for the buck. Respectfully, Rick Sparks, County Attorney. |
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6.
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Posted by skull1 July 21, 2008
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Can't Mr. Sparks sue on behalf of the County and not have to pay someone else 25% of the collected funds to do so?
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5.
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Posted by perplexed July 20, 2008
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So, Mr. Bolton, are you telling us that the three years, that we, the insured, were charged for a county tax on our policies, that is not longer collectible through the passage of this new bill, is now a profit for the insurance company. Where does the policyholder and taxpayer weight in on this. They are being charged money under false pretences, and they are paying, but it doesn't seem like the insurance companies are, and in turn the county essentially double taxes us for uncollectable revenue from the premium. Now thats really taking care of the taxpayer and the poliyholder.
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4.
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Posted by sbolton312 July 20, 2008
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Your story gives the impression that "insurance companies" are out there trying to avoid Franklin County's insurance premium tax. Nothing could be further from the truth. In fact, the tax is paid by the policy-holders and remitted through the companies to the local government.
The problem here is a 19th century taxing system being adapted to the 21st century. The process isn't working so well. We have over 270 local taxing authorities in Kentucky, each of which is attempting to levy and collect a tax on insurance risks located in their jurisdiction. Each of these taxing authorities sets its own rates on whatever lines of insurance it can lawfully tax. As an insurer, trying to figure out which tax to pay to which taxing authority is an administrative nightmare. The insurer is responsible for paying the tax, but often can't figure out where the risk is located because an agent remits the wrong information, an insured really doesn't know where his or her property is located or the company is relying on an inaccurate method of location such as zip codes. Most companies rely on their local agents, but you can imagine what a chore this is for a national company that writes coverage by telephone or over the internet. Some of these problems were addressed in the first ever comprehensive legislation supported by both the industry and local governments in the past session. House Bill 524 addressed some, but not all problems. However, it should help some with the problems that resulted in the city of Frankfort being paid a significant amount of tax that should have been paid to Franklin County. There remain many significant flaws in the system to be addressed, but Franklin County's experience should be used as an incentive to obtain further reform in an antiquated system rather than simply bash the insurance industry. In the immortal words of Pogo, "We have met the enemy and it is us.". Steve Bolton, State Retained Counsel, American Insurance Association |
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3.
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Posted by RangerDanger July 20, 2008
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Trying is right. They'll have to raise the taxes to pay someone to figure out how to spend this insurance tax money.
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2.
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Posted by trying July 20, 2008
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You wish...
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1.
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Posted by perplexed July 20, 2008
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If the county does collect this money, will it lower property taxes?
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