Legislation to clarify the Non-admitted and Reinsurance Reform Act (NRRA) so that it explicitly excludes captives has been reintroduced in the US Senate.
Vermont’s Patrick Leahy and South Carolina’s Lindsey Graham, who is running for president in 2016, reintroduced the Captive Clarification Act into the Senate in a bid to clarify whether independent procurement taxes on the insurance purchased from a captive must be paid to the insured’s home state in addition to the captive domicile.
Professional association RIMS has publically backed the legislation, with president Rick Roberts saying: “For risk professionals to successfully manage alternative risk programmes like captives, we need a clear understanding of government regulations. The NRRA, in its original form, leaves risk professionals guessing as to whether their organisations will be taxed twice and even whether they need to change the location of their captive.”
“The Captive Clarification Act clears up that uncertainty. We fully support Leahy and Graham’s reintroduction of the legislation and hope that a committee hearing and companion bill from the House of Representatives will follow soon.”
The NRRA, a part of the Dodd-Frank Act reforms, has long been challenged for its ambiguity around whether it applies to captive insurance.
Efforts to clarify the NRRA took shape last year following pressure from the Coalition for Captive Insurance Clarity (CCIC), which was formed by the Vermont Captive Insurance Association to push for reform.
The original Captive Clarification Act was introduced into the Senate in August 2014 following pressure from the CCIC.
At the time, Leahy said the legislation was a “straightforward, commonsense clarification” that would “simply clarify congressional intent”, but the 113th US Congress session ended at the beginning of January this year without movement on the act, and no sign of a companion bill in the House of Representatives.
