The following are select State bills relevant to the areas of reinsurance and captive insurance.
Nonadmitted and Reinsurance Reform: Since our posting of January 18, 2011, the legislatures of Mississippi (HB 785), Vermont (HB 164), and West Virginia (HB 2963) are among other states that have introduced legislation in response to the mandates of the Nonadmitted and Reinsurance Reform Act of 2010 of the Dodd-Frank Act. Vermont’s bill appears to be modeled after the surplus lines proposal approved by the National Conference of Insurance Legislators (“NCOIL”). A companion bill (SB 0036) to HB164 was introduced in Vermont’s Senate. West Virginia’s bill contains an express reference to the surplus lines proposal approved by the National Association of Insurance Commissioners (“NAIC”). Mississippi’s bill, which passed the House of Representatives on February 2, 2011 and was subsequently transmitted to the Senate, does not appear to follow either the NAIC or the NCOIL surplus lines proposal.
Reinsurance and Taxation: Texas’ House of Representatives introduced legislation (HR 243) expressing its opposition to federal legislation (H.R. 3424) introduced in the U.S. House of Representatives and to any other proposal that would limit the use of reinsurance by non-U.S.-based insurance companies. As previously reported in our post of August 17, 2009, H.R. 3424 seeks to amend the Internal Revenue Code of 1986 to disallow the deduction for excess non-taxed reinsurance premiums with respect to the United States risks paid to affiliates.
Captive Insurance: West Virginia introduced legislation (HB 2983) that would, among other things, subject captive insurers organized in the state as risk retention groups to additional provisions of the Insurance Code, including, but not limited to, section fifteen-a, article four (credit for reinsurance; definitions; requirements; trust accounts; reductions from liability; security; effective date). A companion bill (SB 356) to HB 2983 was introduced in West Virginia’s Senate. Additionally, Montana introduced legislation (HB 419) that would establish requirements for the operation of captive insurance companies and for interaction between captive insurance companies and their protected cells. Among other things, the bill revises the qualification for protected cell sponsors and participants.
This post written by Karen Benson.