Ever since 1996, here in California, the California Department of Insurance, CDI, has been engaged in the program of selling tax breaks to insurance companies doing business in this state. Just to make sure the companies can afford it, the CDI, will only sell tax breaks to companies which make in excess of $100 million per year in premiums.
This how the program works, for the sake of discussion let’s say Farmers Insurance decides to buy a tax break, and they pay the CDI $1 million. Farmers Insurance will then be given a tax credit in the amount of $200,000, or 20% of the tax credit payment. The $1 million dollars will go into a separate department within the CDI, called The California Organized Investment Network, known as (COIN). Now, to track the million dollars one step further the money will be sent from (COIN) to the Community Development Financial Institution, (CDFI), which will then funnel the money to the desired recipient.
Just recently, in October of 2013, Governor Brown signed AB 32 which will increase the amount of tax breaks for sale from $2 million which was the old amount, to $10 million for 2014. I find it very hard to accept the fact that the very institution which is supposed to protect the insurance consuming public here in California from the unscrupulous actions of insurance companies, is in fact the very institution that is selling them tax breaks.
The COIN program is designed to take the money from the insurance companies, and use it to specifically assist undeserved communities here in California. I understand the benevolent actions, however, in this state we have been told for the past 5-6 years on a continual basis, the fact that we are running huge budget deficits and that one of the largest cities in the state, Los Angeles, will need to pass a referendum just to fix the sidewalks.
The following is an example of the 2013 premium income for just a few of the insurance companies selling policies in California and what their income amounted to. Prudential Insurance Company of America made $3,459,212,893 in California in 2013. State Farm Mutual Automobile Insurance Company made $2,836,023,512 in California in 2013. Anthem Blue Cross Health and Life Insurance Company made $5,272,691,200 in California in 2013. The figures just quoted were provided to the CDI by the carriers along with their desire to invest in California.
I confess that my mathematical ability is somewhat lacking, but I know that for every dollar in tax breaks provided by California, some other citizen like you or me will need to pick up the shortfall. Instead of giving tax breaks to large financial institutions that really do not need them, why don’t we give tax breaks to California citizens who are responsible enough to have insurance on their personal and business property?