In a major win for small-business insurance agencies and brokerages, proposed regulations issued August 8 by the U.S. Treasury and the Internal Revenue Service (IRS) specifically state that "insurance agents and brokers" are not excluded from taking the 20% pass-through tax deduction that was passed as part of the tax reform legislation signed into law late last year.

Many members of the National Association of Professional Insurance Agents (PIA) own independent insurance agencies that are organized as sole proprietorships, partnerships, or Subchapter S corporations. Such small businesses do not pay corporate income tax. Instead, their income "passes through" the firm and appears directly on their owners' individual tax returns, where it is taxed as normal income. The 20% deduction, subject to other limitations imposed by law or regulation, will lower these individuals' tax bills.

Treasury's proposed regulations explicitly specify that insurance agents and brokers are not barred from taking the deduction, unlike others, like stock brokers, for example.

"PIA has been aggressively advocating for this tax relief for pass-through entities since passage of the tax reform law (P.L. 115-141) last December, on behalf of PIA members," said PIA National Executive Vice President & CEO Mike Becker. "We advocated for the language that was ultimately adopted by Treasury and the IRS in their proposal."

"PIA was gratified to see the proposed Treasury regulation explicitly excludes insurance agents and brokers from the category of businesses that are not permitted to take the 20% pass-through deduction," said Lauren G. Pachman, Esq., PIA counsel and director of regulatory affairs. "It's a good day for small-business insurance agencies, whose businesses will be taxed the way pass-through entities were intended to be by Congress."

This statement is online at: http://www.pianet.com/news/press-releases/2018/independentinsuranceagentsscoremajorvictoryinpropsedregulationsforpassthrough080918

The purpose of Advisory Letter 2018-02 is to inform all insurance producers that Act 299 of the 2018 regular session of the Louisiana Legislature, which became effective on August 1, 2018, gives the Commissioner of Insurance the authority to allow an insurance producer to employ in his business or to associate with his business an individual previously convicted of a felony if the producer first obtains the written consent of or a waiver from the commissioner.

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PIA issued a statement saying we are pleased that Congress did not let the National Flood Insurance Program (NFIP) expire. On July 31, 2018 the U.S. Senate joined the House in passing a four-month extension of the NFIP, through November 30, 2018. It was the latest in a string of short term extensions. President Trump quickly signed the bill.

"Millions of Americans woke up this morning not knowing whether congressional inaction would leave the flood insurance program they rely on hobbled in the height of hurricane season," said PIA National Vice President of Government Relations Jon Gentile. "The passage of a clean extension by the House and Senate is positive. That said, waiting until the last minute to act should be a thing of the past. Congress now has four months to work to find a way to provide a long-term reauthorization of the program. That work should begin today."

In an opinion article for PC 360 and the National Underwriter, ["Why is long-term re-authorization of NFIP so elusive?"], Gentile said it is "more than possible" that lawmakers can use the four-month extension period to come up with a long-term reauthorization of the NFIP with bipartisan reforms."

A forecast issued on Aug. 2 by Colorado State University says 12 named storms are likely to form this year, down from 17 last year and below the 1981-2010 average.

However, the outlook is a slight increase from the July forecast and comes as the Atlantic Basin is about to enter its most active period of the hurricane season.

"With all of our seasonal forecasts, we can still have a nasty hurricane," said Phil Klotzbach, co-author of the report.

"People still need to prepare for every hurricane season regardless of our seasonal forecasts."

The Federal Emergency Management Agency (FEMA) has used the capital markets for the first time to access reinsurance cover for the National Flood Insurance Program with a three-year, $500 million catastrophe bond, known as FloodSmart Re. The deal is structured to cover, for a given flood event, 3.5 percent of losses between $5 billion and $10 billion, then 13 percent of losses between $7.5 billion and $10 billion. FEMA will pay $62 million in premium for the first year of coverage.

READ: NFIP set for major reform under Maurstad's lead

"Reinsurance is a linchpin to help strengthen the financial framework of the NFIP," David Maurstad, chief executive of the NFIP, said in the statement. "Engaging capital markets was the logical next step in maturing the NFIP Reinsurance Program in a way that benefits policyholders and taxpayers, and expands the role of the private markets in managing flood risk in the United States."

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