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Member, Beacon International Group, Ltd.
A co-author and sponsor of the Nonadmitted and Reinsurance Reform Act said the act was never meant to apply to captive insurance.
Addressing the U.S. House of Representatives speaker Wednesday in a statement for the Congressional Record, Rep. Scott Garrett, R-N.J., said, “Unfortunately, several states have indicated that they plan to interpret the NRRA to apply to the captive insurance industry. This was not the intent of Congress. In drafting this legislation, it was never contemplated to have the captive industry fall under the NRRA.”
NRRA was put into law as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
“Should regulators implement this faulty interpretation, captive insurance companies would be subject to additional taxation and regulation — the exact opposite intent of the underlying legislation,” Rep. Garrett said.
The congressman noted that, in the bill’s summary, the intent of the legislation was stated as applying only to surplus lines insurance and reinsurance.
“As one of the authors of this legislation, I am committed to ensuring that this title of Dodd-Frank is implemented as Congress intended, and I look forward to working with my colleagues on the Financial Services Committee to address this issue if necessary in the future,” Rep. Garrett said.
In a December letter, Judy Biggert, the outgoing chair of the House Committee on Financial Services’ Subcommittee on Insurance, told the committee’s new chairman, Rep. Jeb Hensarling, R-Texas, and the committee's new ranking member, Rep. Maxine Waters, D-Calif., that the NRRA was never meant to apply to captive insurance.
The NRRA “was intended to create certainty in the tax treatment and regulation of the surplus lines and in the reinsurance industry,” the Illinois Republican said in her letter. “Despite this very specific purpose, a couple of states are misinterpreting the application of NRRA's definition” of what is considered nonadmitted insurance.