NAMIC-led Effort to Increase Small-company Tax Liability Limitation Level Results in Newly Sponsored Legislation

Two key members of the U.S. House of Representatives showed their long-standing support of small insurance companies by introducing NAMIC-endorsed legislation that would improve their financial stability, allowing them to better serve their policyholders.

The bill, introduced by Reps. Earl Pomeroy, D-N.D., and Paul Ryan, R-Wis., would increase the alternative tax liability limitation for small property/casualty insurance companies.

The issue concerns Section 831(b) of the Internal Revenue Code that allows small property/casualty insurers with direct or net written annual premiums not exceeding $1.2 million to be taxed on their net investment incomes. The maximum level was last changed in 1986. With many small companies approaching the $1.2 million limit, it is vital that the level is increased and that it be tied to an annual adjustment in the cost of living.

NAMIC has led the charge of increasing the level to $1.971 million to reflect the last 22 years of inflation and to include an annual cost-of-living adjustment for future years. The proposal mirrors S.2040, introduced in the Senate by Sens. Blanche Lincoln, D-Ark., and Christopher S. “Kit” Bond, R-Mo., last year.

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

Posted: Tuesday, August 12, 2008 12:00:00 AM. Modified: Tuesday, August 12, 2008 9:35:09 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.