As part of a new two-year, $37.6 billion budget, Connecticut has doubled the majority of its fees levied by the department of insurance, a move other states might emulate given widespread deficits in their coffers.

Among the increased fees facing the state’s agents and brokers directly are licenses or renewals for insurance producers ($80; up from $40), public adjusters ($250; up from $125) and surplus lines brokers ($625; up from $500). Fees for other services such as exams, copies of licenses and filings for appointments also doubled.

Two agents’ groups in the state are now left to deal with how their members, many of whom are small business owners, can operate with the new fee schedule while the economy already presented them daily challenges.

The new fees, which take effect Oct. 1, were part of a budget enacted by the Connecticut General Assembly Sept. 8. The budget went into law without the signature of the state’s Republican governor, M. Jodi Rell, who felt more cuts were needed in state spending rather than raise taxes. The state faces an $8.5 billion deficit as the budget took effect in September, nearly two months late for their budget year that began July 1.

‘One of those hard pills to swallow’

Warren Ruppar, president of the Independent Insurance Agents of Connecticut, told IFAwebnews.com that his members were aware that insurance fees would be increased by state legislators, but did not know the extent until the budget was finalized.

“Unfortunately, it is one of those hard pills to swallow, but you know as a businessperson you are going to see it,” Ruppar said. “It is really a cumulative issue where all licenses, fees and taxes are increased across the board and the result is an increase on everything you do as a businessperson.”

Ruppar said given the current economy, the insurance industry was already experiencing lower premiums and agencies going out of business in the state and now come the increased fees.

“You have to pay the fees to stay in business,” he said. “The difficulty of the increases, for an agent, is that you can’t pass the increase onto you customer. You need to absorb it. You throw that [on top of the difficulties from the economy] into one big pot and it’s difficult.”

Diane Fowler

Diane Fowler, executive director of the Professional Insurance Agents of Connecticut (PIACT), told IFAwebnews.com said her group also “anticipated” the fee increases “as the state is looking for solutions to a growing budget crisis.”

“PIACT members are small business owners, who provide jobs in their communities and contribute significantly to the Connecticut,” she said. “We are never pleased, particularly in these challenging economic times when our members are required to carry increased taxes and fees.”

Others to follow?

Ruppar said he understands that legislators need to look at all avenues to increase revenues for the state and “unfortunately,” he said, insurance fees are one such source of income.

“I’m sure other states are looking at increasing taxes and fees,” he said.

Earlier this year, D. Scott Liebert, president of the Professional Insurance Agents of New York, expressed his displeasure with state legislators regarding a proposed $700 million assessment on the state’s health insurance carriers.

“In the insurance industry, companies now are receiving surcharge and assessment increases as a result of these budget actions,” Liebert wrote in a letter to state officials. “There can be no doubt that this levy will be passed on to policyholders.”

Representing 1,500 independent insurance agencies, Liebert said he was “compelled to express my indignation” at the enactment of the assessment.

“This increase in premiums will make health insurance unaffordable for many employers and families throughout our state,” he wrote. “The agencies we represent and the thousands of employees who work for them, are strapped even further to cover the cost of spiraling state government. We can’t afford it! Nor do we want to be in the unenviable position of explaining these impending and seemingly unending premium increases to our customers or our employees.”