Chalk Up Another CCP Victory

Last week, Sen. Tom Harkin, D-Iowa, announced he would co-sponsor S-2040 to increase the small property/casualty insurance company investment income election. Harkin’s decision was a direct result of his meeting with participants of NAMIC's Congressional Contact Program.

When 21 representatives of NAMIC member companies from Iowa headed to Capitol Hill earlier this month as part of the CCP, they were a force to be reckoned with. Armed with talking points and on a mission to persuade members of Congress to protect the interests of property/casualty insurance companies and their customers, the group spent a day-and-a-half in meetings with their various senators and representatives, including Harkin. As has been the case many times in the past, their efforts did not go in vain.

The tax issue concerns a section of the Internal Revenue Code that allows small property/casualty insurance companies with direct or net written annual premiums not exceeding $1.2 million to elect to be taxed on their net investment income. This election level has not changed since 1986. With many small companies approaching the $1.2 million limit, both the companies and their customers will be adversely impacted if the level is not raised.

The modification of this section of the IRS is very important to the communities that depend on small property/casualty insurance companies to provide them with affordable property insurance. With the increased election level tied to an annual adjustment in the cost-of-living, these insurance companies can continue to keep premiums low in areas where larger insurers either do not write coverage or charge higher premiums than consumers can afford. Also, these companies rely on the tax benefits currently offered to small property/casualty insurers to provide additional surplus and cash flow so that the necessary resources are available to immediately send to consumers after the storms.

NAMIC has led the charge to have the level increased and successfully saw the introduction of a proposal that would bump up the level to $1.971 million with a cost of living adjustment. That bill was introduced by Sens. Blanche Lincoln, D-Ark., and Christopher “Kit” Bond, R-Mo. With Harkin’s co-sponsorship, the bill can now go forward through the legislative process.

Direct questions to NAMIC’s Senior Federal Affairs Director Marliss McManus.

Posted: Tuesday, July 29, 2008 12:00:00 AM. Modified: Tuesday, July 29, 2008 10:53:25 AM.

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We are 1,400 property/casualty insurance companies serving more than 135 million auto, home and business policyholders, with more than $196 billion in premiums accounting for 50 percent of the automobile/homeowners market and 31 percent of the business insurance market. We are the largest and most diverse property/casualty trade association in the country, with regional and local mutual insurance companies on main streets across America joining many of the country’s largest national insurers who also call NAMIC their home. More than 200,000 people are employed by NAMIC members.