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Letter from VCIA's President Richard Smith giving background Dear VCIA Members and Friends, There has been much concern in the captive industry recently about provisions in the Dodd-Frank Act and their potential impact on the captive industry. Within the Dodd-Frank Act is the Nonadmitted and Reinsurance Reform Act (NRRA), which was intended to streamline the regulation and taxation of surplus lines insurance. However, some of the definitions in NRRA are so broad that questions have been raised about its potential impact on captive insurance. To address Member's concerns, we asked our federal legislative counsel, James T. McIntyre of McIntyre & Lemon, PLLC in Washington, D.C., to provide us with a white paper on the potential application of NRRA to captive insurance. While some of the paper's conclusions regarding NRRA's application to captives are not absolute, it is clear to VCIA that NRRA's provisions regarding state taxation of "nonadmitted insurance" were not intended to and do not apply to captive insurance; and that the longstanding and substantial constitutionally-based limitations on state taxation of independently procured insurance remain in place. Although we believe NRRA's provisions regarding state taxation of "nonadmitted insurance" do not apply to captive insurance, we plan to discuss with members of Congress the potential need of legislative clarification to eliminate any ambiguity. Given the importance and complexity of the issues raised in the White Paper, we believe that consultation with your captive insurance legal counsel is essential, as every captive has unique circumstances. To access the full white paper, please click here: http://www.vcia.com/u/WhitePaperNRRAapplicationtocaptives100611.pdf Both the National Risk Retention Association and Captive Insurance Companies Association support the conclusions reached by Jim McIntyre as well. Your interests, and the overall health of the captive industry, are what guide all of the work that we do. Thank you,
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