RIMS supports reintroduction of the Captive Clarification Act

RIMS, the risk management society, said earlier this week that it supports the reintroduction of the Captive Insurers Clarification Act that would officially omit captives from the Nonadmitted and Reinsurance Reform Act (NRRA), providing risk professionals with greater clarity on expenses associated with their organization’s captive investment.

RIMS said in a press release that the NRRA failed to explicitly exclude captives from the definition of “nonadmitted insurer,” leaving insureds unclear on whether independent procurement taxes on the insurance purchased from their captive must be paid to their home state in addition to the captive domicile.

The Captive Insurers Clarification Act was reintroduced by Sen. Patrick Leahy (D-VT) and Sen. Lindsey Graham (R-SC).

“For risk professionals to successfully manage alternative risk programs like captives, we need a clear understanding of government regulations,” said RIMS President Rick Roberts in the release. “The NRRA, in its original form, leaves risk professionals guessing as to whether their organizations will be taxed twice and even whether they need to change the location of their captive.”

The Captive Insurers Clarification Act clears up that uncertainty, Roberts said. “We fully support Sen. Leahy and Sen. Graham’s reintroduction of the legislation and hope that a committee hearing and companion bill from the House will follow soon,” he said.

RIMS is a global not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities throughout the world. Founded in 1950, RIMS brings networking, professional development and education opportunities to its membership of more than 11,000 risk management professionals located in more than 60 countries.