In 2007, the state of New Hampshire embarked on a multi-year initiative to make it one of the most attractive places in America for property/casualty and life insurance companies to call home. At the center of this initiative: A reduction in the insurance premium tax from 2% to 1.25%, making New Hampshire's rate the lowest in the Northeast and in the lowest ten nationwide. For Acadia Insurance Company, this kind of forward-thinking action was a major reason to redomesticate to New Hampshire.
Acadia Insurance redomesticated in 2007, and according to CFO Charles Hamblen, they have realized a lower premium tax burden as a result. In addition to the low tax burden and wider access to a skilled labor pool, they have also found there to be a generally positive attitude toward businesses in the state.
While many states are facing budget challenges that cause them to consider tax increases and service reductions, Hamblen notes that "New Hampshire has remained relatively stable." This kind of environment lends itself to the unique nature of insurance companies, and the challenges they face when considering a significant business decision like redomestication. Redomestication - the process of changing an insurance company's state of incorporation - can be complex. But the NH Insurance Department's collaborative nature with applicants and other state agencies makes the procedural process straightforward and supportive.
Of course, no company would pursue redomestication unless the long-term value outweighs the short-term costs. That's why CEOs and executives look at other important factors - like professional networks and industry support systems - to help with their decision-making.
"The NH Domestic Insurance Company Association is very active in supporting the local industry," praises Hamblen. "You don't always see that in other places." The NH Domestic Insurance Company Association is one of five state organizations, including chapters of national organizations, which support the industry.
Dan Swift, Acadia's General Counsel, also pointed out that the overall quality of life in New Hampshire can make it easier to recruit talent there. "It's a good place to live, and there's no income or sales tax," Swift says. Hamblen sums it up neatly: "There are more opportunities to pay less in New Hampshire."
J. Bruce Ferguson, SVP of State Relations for the American Council of Life Insurers, says that New Hampshire excels in the three areas he considers of greatest importance for companies looking into redomestication:
- Friendly regulatory environment. Ferguson notes that New Hampshire has "some of the best and brightest" insurance regulators in the nation. The goal of the department is to work with their domestics to find solutions, rather than throw up roadblocks.
- Low premium tax rate. New Hampshire's insurance premium tax rate is the lowest in the Northeast, and ranks in the top ten nationwide. Ferguson calls New Hampshire's tax climate "terrific," and while the premium tax is low, the bigger benefit is on the retaliatory side. By redomesticating to New Hampshire, fewer states can charge property/casualty and life insurance companies with a higher retaliatory tax on the business they write outside of New Hampshire.
- Stable and well-educated workforce. New Hampshire has a "skilled, able workforce," according to Ferguson. The state ranks fourth in the nation for people with a bachelor's degree or higher, and sixth in the nation for people with a high school education or higher. Swift says, "There are a lot of young, smart, talented people in New Hampshire, which is very important as well."