read Read

e-mail E-mailprint Print

SMALL PROPERTY/CASUALTY INVESTMENT INCOME ELECTION

THE ISSUE IS. . to increase the small property/casualty insurance company investment income election (Internal Revenue Code Section 831(b)(2)) to reflect the inflationary impact since its enactment in 1986.

IT'S IMPORTANT BECAUSE. Section 831(b) of the Internal Revenue Code allows property/casualty insurance companies with direct or net written annual premiums not exceeding $1,200,000 to elect to be taxed on their net investment income. This election level has not changed since the Tax Reform Act of 1986 created Section 831(b). If it were indexed in order to account for inflationary changes since 1986, the investment income election would be $1,971,000.

In the 108th Congress, NAMIC led the legislative effort to increase the Section 831(b) level to $1.89 million with an annual cost-of-living increase. NAMIC was successful in getting this provision passed by both the House and Senate as part of the FSC/ETI "JOBS" bill. Unfortunately, the House version of the JOBS bill was significantly more expensive than the Senate version and in order to achieve revenue neutrality most of the House bill was removed and the 831(b) provision was one of these casualties. Four Senators filed amendments during the House-Senate Conference on the JOBS bill to reinstate the Section 831(b) amendment including Senate Finance Committee Chairman Charles Grassley (R-IA), Ranking member Max Baucus (D-MT) and Senators Kent Conrad (D-ND) and Blanche Lincoln (D-AR). Unfortunately, none of these amendments was offered and the issue will carry over to the 109th Congress where there is broad bi-partisan support for the provision which remains one of NAMIC's top legislative priorities.

NAMIC POSITION. NAMIC strongly supports the expansion of Section 831(b)(2). The modification of this section is very important to the communities that depend on small property/casualty insurance companies to provide them with affordable property insurance. Many small companies are approaching the current $1.2 million limit and both they and their customers will be adversely impacted if it is not raised. 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 rural areas where larger insurers either do not write coverage or charge higher premiums than farmers can afford.

powered by Google

Legislative Action Network

As a "minuteman," you will be in the know at the critical moment when a call to action is necessary or when decisions are being made on issues like federal regulation of insurance, legal reform, terrorism insurance, asbestos reform and small property/casualty company taxation.

Benjamin Franklin Public Policy Award

Every two years, NAMIC presents their coveted Benjamin Franklin Public Policy Award© to lawmakers who have supported a stronger insurance market at least 75 percent of the time. This is demonstrated based on their support of NAMIC's position on certain roll call votes taken, or being a principal player/sponsor on legislation affected the property/casualty insurance industry, during the previous Congress.