Upcoming Conference | 2019 Re-Wire Policy Conference, Dec 10, 2019 Register

Op-ed: Taxing home, auto and business insurance policies to pay for wildfire is unfair to insurance consumers

Kenton Brine is the President of the NW Insurance Council, a non-profit organization dedicated to providing information about Property & Casualty insurance to consumers, media, and policymakers in Washington, Oregon, and Idaho. Brine submitted the following op-ed in response to SB 5996, and a recent Q&A with Hilary Franz in which she voiced her support for and answered questions about the bill.

According to data compiled from the National Association of Insurance Commissioners, on average, the owner of a $300,000 home in Washington pays about $1,000 per year for homeowners insurance. A driver, on average, pays about $915 per year for liability insurance – and a bit more for optional coverages like uninsured motorist, personal injury protection and collision coverage. Meanwhile, a pediatrician, on average, pays about $10,000 per year for medical malpractice insurance. Coverage for a motorcycle, boat or RV might be just a few hundred dollars annually, but liability insurance for construction contractors? Thousands per year.

All of these are examples of Property & Casualty (P&C) insurance – and SB 5996, proposed by Public Lands Commissioner Hilary Franz and state legislators, will increase the state tax on P&C insurance premiums (on top of the current $1.4 billion insurers and our customers already paying) by a whopping 25%. The tax increase on these and other policies is needed, they say, to pay for wildfire suppression and forest health – costs that today are shared among all state taxpayers, not just insurance companies and policyholders.

  • It’s not much, they say; only $2 per month per policy. But it’s $62.5 million per year. And it could average far more than $2 per month on some policies that have no connection to wildfire risk.
  • Pay a little now to avoid paying more later, they say, because the cost of fighting wildfire is increasing. Unless it starts raining all summer, those costs won’t go down, at least not over the first 10-20 years of implementing the Department of Natural Resources’ 20-year forest management plan. So we’ll pay more now – and later.
  • We need to all share in the solution by paying to train firefighters, add new equipment and manage our forests, they say. But today, we DO all share in the solution. Insurance taxes alone contribute roughly $500 million to fire-related programs and services. SB 5996 narrows the group of people paying for wildfire suppression, from all taxpayers to just insurance companies & policyholders.

Insurance companies don’t start wildfires – we literally help put them out, then pay for the damage fires do to our policyholders and offer programs and discounts to help homeowners and communities become more resilient and fire-resistant. Raising insurance taxes for a dedicated fund to fight wildfire is like taxing food to pay for a dedicated fund for shoplifting prevention.

Wildfire prevention and suppression are goals we all share, and the cost should be shared as well. We hope legislators will say no to the insurance premium tax increase.