Heading out to Tucson, Arizona for the annual CICA conference with the usual large Vermont contingent. Dan Towle puts on a great event, and it’s a great opportunity for me to meet and check in with many leaders in the captive world where it’s a little too crazy for me to do at the VCIA conference in August. One meeting to highlight is the Captive Association Leadership Coalition, or CALC, which (as the name sounds) is a gathering of captive association leaders to explore issues facing the captive industry as a whole. Some of the industry’s current issues are following:
TRIA will be up for reauthorization by the end of this year. Though TRIA was created in 2002 as a temporary program to share terrorism losses between the private and public sectors, the program has been extended three times, and will likely be extended again. Unlike former Chairman Hensarling, new Chairman Waters is supportive of an extension of TRIA, which could pass the House more easily in the 116th Congress. VCIA has established good working relations with Treasury staff on captive issues and will play a role in the authorization.
The Tax Cuts and Jobs Act, enacted December 22, 2017, defined premiums ceded to US Insurance companies to foreign (alien) affiliates as base erosion payments and makes them subject to the Base Erosion and Anti-Abuse Tax (BEAT). Treasury recently released informal draft regulations on its impact to insurance and VCIA submitted comments.
Liability Risk Retention Act. Last Congress, Rep. Ross (R-FL) introduced H.R. 3794 The Nonprofit Property Protection Act in the last Congress which will allow nonprofit RRGs with over $50 million in premium to provide property insurance to their members who are 501(c)(3) nonprofits in addition to the liability insurance they already provide. This died in committee and Ross did not seek re-election; however, we expect that it will be reintroduced this Congress.
The NAIC used the New York cybersecurity regulation as the basis for a model law recently adopted by the NAIC. The model law does contain language that subjects RRGs only to the law of their state of domicile. Vermont is not in a hurry to adopt the model law. So far only a few states have passed the NAIC model law. A few other states are also likely to consider adoption in 2019.
The Washington State Insurance Commissioner warned captive insurance companies that have “unlawfully” insured any risk in Washington State in the past 15 years to pay a substantially reduced fine and premium tax penalty for self-reporting this activity or face increasing penalties. VCIA and CICA are tracking developments and exploring remedies.
Finally, what’s with Arizona and time zones? Not quite Mountain, and not quite Pacific! Thank you all very much, and I look forward to hearing from you!