Captive Insurer Clarification Act Would Correct Unintended Consequences of NRRA

In July 2014, Senator Patrick Leahy (D-VT) introduced Senate Bill 2796, a bill to clarify the definition of nonadmitted insurer under the Nonadmitted and Reinsurance Reform Act (NRRA) of 2010. The legislation is cosponsored by Senator Lindsey Graham (R-SC).

The bill would clarify that NRRA was not directed at captive insurance programs. It would limit the states' ability to impose or collect independently procured premium taxes from out-of-state insurers and out-of-state premiums. Many states have used the NRRA definition of "nonadmitted insurer" to allow them to tax 100 percent of the captive insurance premium, regardless of the domicile of the insurer and regardless of where the benefit of the insurance lies. NRRA's original intention was to simplify broker reporting of nonadmitted policies.

Read the Senate legislation, which has been referred to the U.S. Senate Committee on Banking, Housing, and Urban Affairs, and contact the members of this committee. Companion legislation has been introduced in the House by Congressman Peter Welch (D-VT).