NAMIC Commends Proposed Legislation to Support Small Insurers
The National Association of Mutual Insurance Companies (NAMIC) commended Reps. Earl Pomeroy, D-N.D., and Paul Ryan, R-Wis., for their long-standing support of small insurance companies by introducing legislation that would improve their financial stability and allow them to better serve their policyholders.
A bill introduced in the House last week would increase the alternative tax liability limitation for small property/casualty insurance companies. The issue concerns Section 831(b) of the Internal Revenue Code that allows small property/casualty insurers with direct or net written annual premiums not exceeding $1.2 million to be taxed on their net investment incomes. The maximum level was last changed in 1986.
“Small mutual property/casualty insurance companies serve a very important niche market in America. With many small companies approaching the $1.2 million limit, both the companies and their customers will be adversely impacted if the level is not increased,” said Marliss McManus, NAMIC’s senior federal affairs director. “An increased election level tied to an annual adjustment in the cost of living will allow these insurers to continue to keep premiums low and maintain insurance availability and affordability across the nation.”
The proposal mirrors S.2040, introduced in the Senate by Sens. Christopher S. “Kit” Bond, R-Mo., and Blanche Lincoln, D-Ark., last year.
“NAMIC has led the charge to have the level increased to $1.971 million to reflect the last 22 years of inflation and to include an annual cost-of-living adjustment for future years,” McManus said. “The modification of the IRS code is very important to the communities that depend on small property/casualty insurance companies to provide them with affordable property insurance. Because these small companies have very limited financial resources, this provision affords them the opportunity to preserve their assets in order to have the necessary resources available to pay claims.”
Source: Source: NAMIC | Published on August 7, 2008
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