But that building was never fully occupied, defeating the purpose of the law that ostensibly aimed to incentivize more insurance companies to hire people in the state and open offices there, the independent agents said.
He noted that State Farm built a sprawling office complex in Birmingham in the early 2000s. For each $1 million in property investments, the insurer can knock 0.1% off its premium tax bill.īut only one other company, the national insurance giant State Farm, has owned enough property to fully take advantage of the loophole, McFeeters said. The more property owned, the greater the tax benefit. The wording of the law gives Alfa an advantage and allows it to price its policies lower than other carriers, critics have said.Īnother premium tax provision in the law gives insurers a credit for buying property in the state. Alfa’s business model is based on employees, while most other carriers contract with independent agents, who are not considered employees. One credit reduces the premium tax based on the number of in-state employees and offices an insurance carrier has. The tax credits give insurers a reduction on the premium tax, which is essentially a sales tax on insurance policies and is a significant source of revenue for state coffers. “It’s not an anti-Alfa bill we want, it’s the elimination of crony capitalism that’s needed,” said Martin Connors, a lobbyist for the independent agents. That could set the stage for a potential showdown in the Legislature in January. The company, with deep roots in Alabama and more than $1.4 billion in direct written P&C premium last year, doesn’t appear to be ready to give up the credits. He charged that Alfa through the years has lavished heavy campaign contributions on Alabama legislators to keep the tax credits intact.Īlfa officials have maintained that the credits are needed and are available to any and all insurers who want to invest in the state. He was referring to Alfa Insurance, one of Alabama’s largest, oldest and most politically influential property and casualty companies. “These tax breaks are from a law that was written by Alfa for Alfa, and it’s time for them to end,” said Ken McFeeters, an independent agent who has taken the lead on efforts to change the tax law.
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