According to National Association of Mutual Insurance Companies (NAMIC), the country’s smallest, mostly rural, insurance companies would receive a tax benefit if legislation introduced recently in the House of Representatives becomes law.
Reps. Jim Nussle, R-Iowa; Jim Ramstad (R-Minn.) and Earl Pomeroy (D-N.D.) introduced HR 1908, which would increase the amount of premium that could be exempted from federal income tax. All three congressmen are members of the Ways and Means Committee.
Pam Allen, vice president-federal affairs for NAMIC stated this is great news for rural Americans. She added that with this legislation, rural insurers would be able to continue to offer affordable insurance.
Allen also noted that with a membership including five of the 10 largest property/casualty carriers, and every size regional and national p/c insurer, NAMIC represents many of America’s smallest insurers. Those smaller insurers have few employees and typically write one line of insurance such as fire, windstorm or hail, often in only one rural county.
Under current law, an insurance company with up to $350,000 in direct or net written premium, whichever is greater, is tax-exempt. In addition, the law allows companies with direct or net written premiums, whichever is greater, that exceed $350,000 but does not exceed $1.2 million to elect to be taxed on their net investment income.
The bill would increase these amounts to $551 thousand and $1.89 million, respectively. In total, about 150 NAMIC members would be positively impacted by the changed limits.
It is anticipated that a companion bill will be introduced in the Senate sometime in the near future, according to Allen, who added that NAMIC will work to enlist Members of Congress as co-sponsors.
The House Ways and Means and the Senate Finance Committees have jurisdiction over the legislation.
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