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Wednesday, August 13, 2014

Senate Introduces Legislation to Clarify Treatment of Non-Admitted Insurance in NRRA

Senators Patrick Leahy (D-VT) and Lindsey Graham (R-SC) introduced S. 2726, the Captive Insurers Clarification Act, which clarifies that the Non-Admitted Reinsurance Reform Act (NRRA) does not apply to captive insurers. The NRRA was included in the Dodd-Frank Act to facilitate the proper collection and allocation of self-procurement taxes, but confusion regarding how the NRRA treats captive insurance is a concern for the captive insurance industry. This bipartisan legislation would define the term “nonadmitted insurer” not to include a captive reinsurer. Senator Patrick Leahy stated: "Congress never intended the NRRA to include captive insurers and the legislation I have introduced with Senator Graham would simply clarify congressional intent."

Sen. Leahy further explained why this legislation was needed "due to the ambiguity of the NRRA, captive insurers are concerned that both the state in which a captive is headquartered, and the state in which the captive is domiciled, may claim the premium tax. The Captive Insurers Clarification Act would simply clarify that such companies were never intended to be included under the Nonadmitted and Reinsurance Reform Act. Applying the NRRA to captives would eliminate the specialized regulation of the captive industry that states like Vermont have worked to cultivate."

Learn more from Sen. Leahy.

The ABIA has a Task Force of members that work on issues related to the NRRA and captive insurance. If you are an ABIA member and would like to learn more about ABIA's work on captives or join our NRRA/captives Task Force, please contact us and visit our website.