The departing chairman of the subcommittee of insurance in the House of Representatives, Judy Biggert has reaffirmed that the Nonadmitted and Reinsurance Reform Act (NRRA) was never intended to apply to captive insurance.
In a letter to the new chairman and ranking member of the committee, Biggert wrote: “As a supporter of NRRA and an advocate for its inclusion and passage as part of Dodd-Frank, I can tell you unequivocally that the NRRA was never intended to include the captive insurance industry.”
“This provision (NRRA) was intended to create certainty in the tax treatment and regulation of the surplus lines and in the reinsurance industry. Despite this very specific purpose, a couple of states are misinterpreting the application of NRRA’s definition of ‘Non-Admitted’.”
Last year the Vermont Captive Insurance Association (VCIA) formed the Coalition for Captive Insurance Clarity to push for clarity that may include legislative language to reaffirm that the NRRA was never intended to apply to captive insurance.
Dan Towle, Vermont’s director of financial services, said: “A few domiciliary states and opportunistic service providers are clearly exploiting the present situation which is not in the best interest of their clients or the industry as a whole.”
Richard Smith, president of the VCIA, said: “This endorsement from the outgoing subcommittee chairman, who played a substantive and important role in crafting the NRRA, makes it crystal clear—captive insurance is not and never was intended to be included in Dodd-Frank.”
