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Industry welcomes bills to clarify NRRA's application to captive insurers

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BURLINGTON, Vt. — The president of the Vermont Captive Insurance Association is “cautiously optimistic” about the chances for bills in Congress aimed at clarifying the federal Non-Admitted Reinsurance Reform Act as it relates to captive insurance.

Speaking at a news conference Tuesday at the VCIA's annual conference in Burlington, Vermont, VCIA President Richard Smith noted that the Senate version of the bill introduced by Sen. Patrick Leahy, D-Vt., and Sen. Lindsey Graham, R-S.C., has bipartisan sponsorship from two influential senators.

“When they get behind something I'm not saying it's a done deal, but it's a huge step forward,” Mr. Smith said.

Meanwhile, on the House of Representatives' side, a similar measure was introduced by Rep. Peter Welch, D-Vt. There the VCIA and others working through the Coalition for Captive Insurance Clarity are working closely with relevant House committee staff members to promote passage of the measure, Mr. Smith said.

Enacted in 2010 as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the NRRA has raised questions about the ability of the home states of captive parent companies to regulate and tax those companies' captives domiciled elsewhere. Many in Congress, including the legislation's original sponsors and Sen. Leahy in an announcement Monday of the newly introduced technical corrections bills, have said that the NRRA was never meant to apply to captives.

While saying the impact of confusion over the NRRA has had a limited impact on the Vermont domicile and its captives thus far, Mr. Smith said he thinks it's important to clarify the issue.

“I was really nervous about it,” Mr. Smith said. “I thought it would cause a fair amount of dislocation in the industry. I haven't seen that, and I haven't heard that anecdotally.” But, Mr. Smith said, “I still think it's important to clarify the issue.”

David F. Provost, deputy commissioner in the Captive Insurance Division of the Vermont Department of Financial Regulation, said the NRRA has not led to an increased number of captive redomestications from Vermont.

“We've seen some redomestications but not at a really different pace than we always have,” Mr. Provost said. He added that on a net basis, Vermont typically sees more captives moving into the domicile from elsewhere than relocating from Vermont to other states.

This year's VCIA conference saw more than 1,000 attendees pre-registering for the event, Mr. Smith said, representing 40 states and eight countries.

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