The National Association of Mutual Insurance Companies (NAMIC) today commended Reps. Earl Pomeroy, D-N.D., and Paul Ryan, R-Wis., for introducing legislation that would improve the financial stability of small rural insurance carriers and allow them to better serve their policyholders.
The bill, introduced yesterday, would increase the alternative tax liability limitation for small property/casualty insurance companies. Section 831(b) of the Internal Revenue Code allows small property/casualty insurers with direct or net written annual premiums not exceeding $1.2 million to be taxed on their net investment income. The $1.2 million threshold was created in 1986.
“Small mutual property/casualty insurance companies serve a very important niche market in the United States. Many of these small companies are approaching the $1.2 million limit, and both the companies and their customers will be adversely impacted if the election level is not increased,” said Marliss McManus, senior federal affairs director. “If the election level is increased and tied to an annual cost-of-living adjustment then these insurers can continue to keep premiums low and serve areas where affordable insurance might otherwise not be available.”
Last year, similar legislation, H.R. 6755 and S. 2040, was introduced by Reps. Pomeroy and Ryan in the House and by Blanche Lincoln, D-Ark., and Christopher S. “Kit” Bond, R-Mo., in the Senate.
“NAMIC has led the charge to have the level increased to $2.025 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. Many of these smaller companies have limited financial resources and this legislation would allow them to preserve their assets so that they have the necessary reserves to pay claims.”
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Posted: Thursday, July 23, 2009 12:00:00 AM. Modified: Thursday, July 23, 2009 11:37:10 AM.
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