27 August 2014Law & regulation

Vermont backs NRRA bill to clarify captives

The Vermont Captive Insurance Association has highlighted a bill designed to clarify the treatment of captives in the federal Non-Admitted Reinsurance Reform Act (NRRA) during its recent annual conference.

Vermont Senator Patrick Leahy (D-VT) and South Carolina Senator Lindsay Graham (R-SC) cosponsored the technical corrections bill, designed to clear up confusion about the treatment of captives under the NRRA.

The NRRA was designed to address only surplus and reinsurance lines and was never intended to apply to captives. Some states, however, have tried to tax home state parent companies of captives domiciled elsewhere, although the domiciles have already taxed the captives.

This bill, and another introduced by Vermont Representative Peter Welch (D-VT), with the assistance of the Coalition for Captive Insurance Clarity, was written to clear up this confusion.

“The bipartisan support for this bill is refreshing,” said Len Crouse, JLT Insurance Management USA partner and former Vermont captive insurance regulator. “But if any states are confused about the intent of the law, additional clarity is welcomed. We’re hopeful the bill will become law.”

“As always, the VCIA offered a fantastic conference,” said Guy Ragosta, JLTIM chief executive officer and partner. “It’s no surprise that the VCIA and the state of Vermont continue as the gold standard in captive insurance.”