WASHINGTON (Sept. 12, 2007) — Legislation amending the Internal Revenue Code of 1986 to enhance tax incentives for small property/casualty insurance companies has been introduced, the National Association of Mutual Insurance Companies (NAMIC) announced today.
S. 2040, introduced by Sens. Christopher S. “Kit” Bond, R-Mo., and Blanche Lincoln, D-Ark., would increase the investment income election threshold under Section 831(b) of the Internal Revenue Code from the current $1.2 million to $1.971 million, and provide for annual indexation to account for inflation for future years.
“We thank Senators Bond and Lincoln for introducing this bill, a further demonstration of their long-standing support of small insurance companies,” said Marliss Browder, NAMIC senior federal affairs director. “S. 2040 is an important piece of legislation that will go a long way in helping many of the small property/casualty insurance companies throughout the country.”
Currently under Section 831(b) of the Internal Revenue Code, small property/casualty insurance companies may elect to be taxed only on investment income. This election can be made if the greater of net or direct written premiums for the taxable year exceed $350,000, but do not exceed $1.2 million. The election level was last set in 1986.
“Since the provision was never indexed for annual inflation, this amount has remained the same since 1986, thus stifling the growth of small property/casualty companies that provide valuable and affordable services for their customers,” Browder said. “Because small mutual property/casualty insurance companies have such limited financial resources, all of their assets must be preserved for claims paying to ensure their important niche market in America.”
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