We hypothesize that, in their annual accounting reports, propertycasualty insurers allocate premiums from multistate policies to reduce total state taxes. To test this prediction, we exploit the industry's unique state tax disclosures. We examine firm‐level data, collected from the publicly available, statutory reports filed with each state government. Reported premiums at the insurer‐state level, scaled by incurred losses, are regressed on state tax measures. Consistent with tax‐motivated income shifting, we find the premiumloss ratio is decreasing in state tax rates. The negative relation is greatest for insurers specializing in multistate lines of business.

This content is only available via PDF.
You do not currently have access to this content.