While it won't happen this year, she said, provisions to update the small p-c company tax rules are contained in bill pending in both the House and the Senate and which have already been approved by the relevant committees.

Ms. Browder noted that the p-c tax rules have not been addressed by Congress since the Tax Reform Act of 1986.

Under legislation approved by the Senate Finance Committee, insurance companies whose revenues do not exceed $600,000 and which derive at least 50 percent of revenues from net or director written premium would be tax exempt, she said.

Insurance companies with revenues between $600,000 and $1.2 million could elect to be taxed on their investment income, Ms. Browder said. These thresholds are indexed for inflation in the Senate bill, she added.

Meanwhile, the House Ways and Means Committee recently approved a slightly different version of the p-c tax rules. Under the House bill, Ms. Browder said, the same $600,000 threshold for tax exempt status.

However, she said, the threshold for the election to be taxed on investment income would be $1.89 million, although this would not be indexed for inflation.