COMPANION PROPERTY AND CASUALTY INSURANCE COMPANY, ET AL.
STATE OF TENNESSEE, ET AL.
Session Date: November 18, 2014
Appeal from the Tennessee Claims Commission No. X20120824 Robert N. Hibbet, Commissioner, Tenn. Claims Commission Middle Division
Robert E. Cooper, Jr., Attorney General and Reporter; Joseph F. Whalen, Acting Solicitor General; and Jonathan N. Wike, Senior Counsel, for the appellant, State of Tennessee.
G. Michael Yopp and Christopher A. Wilson, Nashville, Tennessee, for the appellees, Companion Property and Casualty Insurance Company and Companion Commercial Insurance Company.
Andy D. Bennett, J., delivered the opinion of the court, in which Frank G. Clement, Jr., P.J., M.S., and Richard H. Dinkins, J., joined.
ANDY D. BENNETT, JUDGE
Tennessee's Retaliatory Tax Law
This case involves Tennessee's retaliatory tax law, Tenn. Code Ann. § 56-4-218(a).
Generally, such statutes provide that whenever the laws of a particular state impose greater burdens and limitations upon companies organized in the enacting state, and doing business in such other state, than are imposed by the laws of the enacting state upon foreign companies doing business in that state, then the same burdens and prohibitions imposed by the foreign state will be imposed by the enacting state upon such companies of the foreign state.
43 Am. Jur. 2d Insurance § 54 (2014). "[T]he principal purpose of retaliatory tax laws is to promote the interstate business of domestic insurers by deterring other States from enacting discriminatory or excessive taxes." W. & S. Life Ins. Co. v. State Bd. of Equalization of Cal., 451 U.S. 648, 668 (1981).
Tennessee's retaliatory tax law, Tenn. Code Ann. § 56-4-218(a), states in pertinent part:
When, by the laws of any other state or foreign country, any premium or income or other taxes, or any fees, fines, penalties, licenses, deposit requirements or other obligations, prohibitions or restrictions are imposed upon Tennessee insurance companies doing business in the other state or foreign country, or upon their agents in the other state or foreign country, that are in excess of the taxes, fees, fines, penalties, licenses, deposit requirements or other obligations, prohibitions or restrictions imposed upon the insurance companies of the other state or foreign country doing business in this state, or that might seek to do business in this state, or upon their agents in the state, so long as the laws continue in force, the same premium or income or other taxes, or fees, fines, penalties, licenses, deposit requirements or other obligations, prohibitions and restrictions of whatever kind shall be imposed upon the companies of the other state or foreign country doing business in this state, or upon their agents in this state.
South Carolina Law
In South Carolina, insurance companies fund the Second Injury Fund through assessments calculated pursuant to S.C. Code Ann. § ...