The Louisiana Insurance Guaranty Association’s board voted Thursday to send $74 million of its surplus to the state, if the Legislature passes a law making the fund transfer legal.

LIGA was set up to pay the claims of failed property insurance companies through fees collected from insurers doing business in the state. Insurance companies receive a state tax credit in return. LIGA has about $230 million in cash.

Director of Operations John Wells said the association faces an estimated $140 million in claims, although the total could change if more insurance companies were to fail.

The guaranty fund has not assessed fees in a decade and, in 2009, returned $77 million to insurance companies.

The association’s board and executives have been discussing what to do with its surplus and what proper funding levels for the guaranty fund should be for more than a decade, said Markham McKnight, a board member who also chairs the association’s finance committee.

“This is the period on the end of a very long sentence,” he said of the decision to send a portion of the surplus to the state.

Association general counsel Stephanie Laborde said right now, LIGA can’t legally send the $74 million to the state. The state Department of Insurance backs that position.

The Jindal administration disagrees, having asked the guaranty fund for the money two weeks ago to help fill a state budget hole.

Sen. Blade Morrish, R-Jennings, has offered legislation that would allow the guaranty fund to make a one-time transfer to the state.

The House Insurance Committee approved the bill on Wednesday, but it must pass the full House and Senate, Laborde said. If the law passes, the guaranty fund will have “the authority but not the obligation” to transfer the money to the state.

McKnight noted the money belongs to the guaranty fund.

The association board spent about 90 minutes discussing the issue, to make sure the board met its fiscal responsibilities in transferring the funds.

Insurance companies who paid the fees have already used their tax credits, said Deputy Commissioner of Insurance Caroline Brock. If the guaranty fund were to return the $74 million to the insurers, those companies would have to repay the credits to the state.

Board chairman Michael Gray said he doesn’t oppose the transfer to the state.

But the funding is just a small part of a much bigger picture, one that needs adjusting, he said. Insurance companies in Louisiana don’t need credits, just a less-punishing tax structure, Gray said. Louisiana has the second-highest premium taxes in the country, and those taxes are the reason that insurance companies founded here leave as soon as they mature, he said.

Follow Ted Griggs on Twitter, @tedgriggsbr.