American businesses and consumers rely on the availability of insurance services provided at competitive rates. The Coalition for Competitive Insurance Rates is made up of business organizations, consumer advocacy groups, insurers and their associations advocating for continued and increased competition within the insurance industry.



A proposal in President Barack Obama’s FY 2017 budget seeks to deny a tax deduction for reinsurance premiums paid to foreign affiliates by domestic insurers. The proposal closely resembles legislation introduced in Congress by US Representative Richard Neal (D-MA) and Senator Mark Warner (D-VA) that would drastically raise insurance rates across the country. The President’s budget proposal and the Neal-Warner legislation would impose an unnecessary and costly tariff on the companies that help spread insurance risks globally. This ability to spread risk has been especially beneficial for consumers and businesses in areas subject to hurricanes, earthquakes, crop failures and other forms of disaster.

More than 100 independent experts, state government officials, business owners, and associations have publicly filed opposition letters to these tax proposals. Additionally, two economic research firms, the Tax Foundation and the Brattle Group, have published independent studies pointing out the potential economic consequences of the proposals.




South Florida 100: Steven Geller Speaks Out on the Importance of Reinsurance

Steven Geller

As appeared in the South Florida Sun Sentinel.

Reinsurance is the insurance purchased by insurance companies. Reinsurance is global in nature — hurricanes in Florida, earthquakes in Italy, terrorism in London, and typhoons in Asia are all possible, but the risks are diversified. 87% of Florida private reinsurance for homeowners is from foreign companies. The Border Adjustment Tax (BAT) being discussed in Washington would place a 20% tax on these foreign companies. Florida Tax Watch estimates that this would directly increase homeowner’s insurance rates by about 10%, and by 14% to 31% once the effects of diversification are included. Floridians must contact their Congresspeople to oppose this increase.

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Reinsurance as import may pose risk to Florida: Study

Ted Bunker

Florida could see residential and commercial property insurance costs soar if lawmakers slap offshore reinsurers with a national border adjustment tax (BAT) proposed by Republicans in Congress, according to a new study.
Should a 20 percent BAT be applied to transactions with offshore reinsurers by classifying the coverage as an import, the study released today by non-profit advocacy organisation Florida TaxWatch assumes the levy would be passed on to insureds through price hikes.
The direct result would be increases of as much as 12.9 percent in annual premium for homeowners insurance, with an aggregate increased cost of commercial and residential property insurance of up to $2.6bn.



Florida TaxWatch Study Finds Severe Risks to Access to Insurance and Reinsurance in House GOP Tax Plan 

 Border-adjusted tax would have serious negative economic impact on Floridians 

Washington, DC (March 20, 2017) – The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today commended a study conducted by Florida TaxWatch, an independent and nonprofit taxpayer research institute, that found a 20 percent border-adjusted tax proposed in the House GOP’s Tax Reform Tax Force, if enacted, would reduce Florida’s supply of insurance and reinsurance, costing each consumer, homeowner and business policyholder up to an extra $910 per year.

The study, Analysis of a Border-Adjusted Tax on Florida’s Property Insurance Market, found that in Florida, the tax would increase the cost of commercial and residential property insurance by $1.4 – $2.6 billion annually. Homeowners would face a 7.9 – 12.9 percent increase in the cost of premiums annually, and reinsurance rates at large would see a steep increase of 14 – 31 percent. Industry experts and economists believe that the harmful effects of a border-adjusted tax on the property insurance market would not be restricted to Florida; coastal states and others likely to be affected by weather-related risk events would suffer greatly as well. 

“This study’s findings are clear.  A border-adjusted tax on insurance and reinsurance would be awful for Floridians, decreasing economic activity, employment and earnings,” said Tom Feeney, president and CEO of Associated Industries of Florida. “That should worry Floridians greatly as well as raise eyebrows across the country.  Other coastal states would be wise to examine the potential impact of this proposal on their consumers and businesses.”

The analysis found that the border-adjusted tax on insurance and reinsurance would indeed have direct and drastic effects on Florida’s economy. The proposal would:

  •  Cut approximately 42,800 – 77,400 jobs;
  •  Slash worker earnings by $1.4 billion - $2.6 billion;
  •  Reduce economic activity in Florida by $2.8 billion - $5.0 billion; and
  •  Inflict long-term damage on Florida’s economy by increasing the cost of living and doing business, resulting in a loss of competitiveness.

“It’s important for Florida lawmakers to recognize the dire impact that this proposal would have on everyone – not just on businesses, consumers and homeowners,” said Feeney. “As Florida TaxWatch’s study illustrates, decreasing the supply of insurance raises consumer premiums and deductibles. It would effectively be a tax on Florida’s economic foundations – businesses, consumers, families and homeowners. And the effects of this proposal will ripple through Florida’s economy, leaving Florida worse off.”

The Florida TaxWatch analysis comes on the heels of a report released by The Brattle Group in January which examined the effects of a border-adjusted tax on the insurance and reinsurance industry on a national scale. According to the report, a border adjustment tax would result in a total loss ranging from $15.6 billion to $69.3 billion, which in turn would raise costs for consumers from $8.4 billion to $37.4 billion. It also cautioned that the impact of border-adjusted tax would be particularly severe in coastal states such as Florida, which host insurance companies struggling to diversify their exposure to risk.

Florida’s thriving property insurance market relies heavily on foreign based companies that sell reinsurance. Ninety one percent of reinsurance for Florida’s homes is from international reinsurers and of the top 38 reinsurers serving Florida’s homeowners, 32 are foreign-based. Recognizing the economic disadvantage that would result from this proposal and similar legislation, a growing chorus of state officials from across the political spectrum has spoken out against reinsurance tax proposals. Current and former state insurance commissioners, senators, representatives, trade associations, consumer groups and other elected officials have publicly criticized the measures, as has Governor Rick Scott.

“Floridians should be wary of any attempt to constrict the supply of insurance and reinsurance,” said Feeney. “Doing so will increase costs for consumers, homeowners and businesses across the board, and that will lead to an inefficient marketplace. It’s crucial that insurance is affordable for Florida’s businesses and residents.”

As an independent, nonpartisan, nonprofit taxpayer research institute, Florida TaxWatch serves as a government watchdog to improve the productivity and accountability of Florida government. The study’s lead author, Katherine Hayden, serves as a consulting economist for Florida TaxWatch, and has extensive economic analysis and consulting experience. The study’s other authors, Bob Nave, Kyle Baltuch and Chris Barry hold expertise in the intersection of government and economic policy. Further information on the study and its authors may be accessed at


The Coalition for Competitive Insurance Rates is made up of business organizations, consumer advocacy groups, insurers and their associations. For more information on CCIR, please visit

Media Contact:

Emily Flynn Pappas

Podesta Group




Insurance debate could doom border adjustment tax

By Ian Adams and R.J. Lehmann

As appeared in The Hill.

President Trump signaled during last week's address to a joint session of Congress that he is, in fact, on board with House Republicans' so-called "border adjustment" proposal, despite earlier indicating that he was not. Of course, getting on the same page on the border tax plan, also known as a “destination-based cash flow tax,” would be key to fulfilling Treasury Secretary Steven Mnuchin's pledge to wrap up comprehensive tax reform before Congress' August recess.

But border adjustment remains controversial on the right, drawing opposition from the Koch network, from Steve Forbes and, perhaps most importantly, from the nation's retailers, who produced an infomercial parody of "BAT" that ran this past week in a high-profile slot during Saturday Night Live.

A less-appreciated, but arguably just as consequential, debate is currently playing out in the insurance world, where a group of large domestic insurance companies long have argued for a system somewhat similar to border adjustment, claiming it would close what they call a tax “loophole” that gave foreign-based insurers a competitive advantage. That proposal—which has been sponsored by Sen. Mark Warner, D-Va., and Rep. Richard Neal, D-Mass.—largely would serve to make insurance more expensive and less competitive. But as bad as the Warner-Neal plan was on that front, the border adjustment proposal is many times worse.

 The key is how the system would treat reinsurance, generally known "as insurance for insurance companies." Reinsurance is a form of risk transfer focused on tackling large and irregular risks, a way for the home, auto and business insurance companies you know to protect themselves from catastrophic losses. Instead of maintaining the huge capital load that would be needed to satisfy all their outstanding risks, primary insurance companies purchase coverage from reinsurers, many of whom are based overseas.

While U.S. insurance companies currently write off the cost of reinsurance as a legitimate business expense, the border adjustment tax would prevent insurers from doing that if the reinsurer was based overseas. This is a remarkably bad idea, and not just for the usual free-trade reasons. To keep reinsurance inexpensive, reinsurance companies take on disparate and unrelated risks from all over the world to create a pool of capital that is both large and diversified. It's not just the case that insurance companies import reinsurance – they also export risk. The alternative is that, instead of being pooled by a global reinsurer with risk of tsunamis in Japan and earthquakes in New Zealand, U.S. risks like Florida hurricanes and California earthquakes would all be concentrated here. That's a terrible risk management strategy.

recently released study by the Brattle Group finds the effects of the border adjustment would be to reduce the supply of reinsurance by between $15.6 billion and $69.3 billion and force U.S. consumers to pay between $8.4 billion and $37.4 billion more each year just to get the same coverage. Overall, property and casualty insurance rates would be expected to rise by 3.4 percent, but some lines of business would see even bigger price hikes, including 3.8 percent in workers' compensation; 5.7 percent in earthquake insurance; 7.2 percent in boiler and machinery insurance; and 7.8 percent in aircraft insurance. Those are hardly ways to make American manufacturing great again.

The insurance debate need not necessarily doom the entire border adjustment proposal. The BAT essentially is based on the VAT, or value-added tax, which is a system that has been implemented in more than 160 countries around the world. However, with the lone exception of China, every other country that uses a VAT excludes insurance and reinsurance from the tax. House Republicans might have to do the same if they want to have any hope of making their August deadline. 

Ian Adams and R.J. Lehmann are both senior fellows with the R Street Institute in Washington.


Border Adjustment Would Sock Florida with Hugely Higher Insurance Rates

By Christian Cámara

As appeared in Insurance Journal.

In recent years, Congress repeatedly has considered legislation that would have adversely and profoundly impacted disaster-prone states like Florida. Luckily, we were spared passage, over and over again. Unfortunately, a tax “reform” package supported by House Republicans and likely to be introduced soon may contain provisions that would do essentially the same damage.

Historically, these bills targeted reinsurance purchased by property insurers from affiliates located offshore. The key change would be to eliminate the U.S. subsidiary’s ability to write off the reinsurance costs from their corporate income. The measures long have been supported by a group of U.S.-based insurance companies, who sought to reduce competition they face from foreign insurers and reinsurers.

Damages from isolated incidents such as fires, thefts and hailstorms are normally paid directly by insurance companies. However, when a massive disaster like a hurricane strikes, reinsurance kicks in and covers the insurer’s losses beyond a pre-negotiated deductible. Changing the tax rules to punish international insurers would be particularly damaging for reinsurers, whose global scope allows them simultaneously to cover enormous risks like hurricanes in Florida and earthquakes in New Zealand, as they are uncorrelated and therefore unlikely to happen at the same time.

Given Florida’s vulnerability to hurricanes, the availability and affordability of reinsurance protection is critical to the state’s economic health and security. According to new research by the Brattle Group, the tax would raise home insurance premiums by 1.9 percent, or $282 million a year in added costs, and raise premiums for business insurance by 6.7 percent, or $367 million in added costs.

As President Donald Trump and House Republicans continue to discuss plans for corporate tax reform, Floridians should pay close attention to proposals for a “border adjustment tax,” which is pitched as a way to tax goods and services companies import, but not those they export. House Republicans have discussed adding this feature to their tax reform “blueprint” in order to dampen the immediate fiscal impact of reducing the federal corporate income tax rate.

The fear for Florida and other disaster-prone states is that financial services, including insurance and reinsurance, would be included in the definition of imported goods and services and thus subject to taxation. In 2011, the Florida Legislature became so concerned by the prospect of Congress enacting a proposal to tax the purchase of offshore reinsurance that it unanimously passed a memorial urging its rejection.

Indeed, Florida has a reason to be concerned about any proposal that taxes the purchase of reinsurance from offshore companies, as 91 percent of the state’s private reinsurance protection comes from such companies, along with 98 percent of the private reinsurance bought by the state-backed Citizens Property Insurance Corp.

According to the Brattle study, applying border adjustment to insurance and reinsurance would cut the amount of reinsurance available to the United States by between 20 percent on the low end and a whopping 80 percent on the high end. Across the country, regular consumers would have to pay $16.9 billion more to obtain the same basic insurance coverage they already have. Florida, which leads the country with $2.9 trillion of insured coastal property, would be hit the hardest.

There is, however, some good news. Most countries that have adopted a border adjustment tax system have zero-rated or altogether exempted financial services from such taxation. Congress should do the same.

Florida has among the highest property insurance rates in the nation, due in no small part to its vulnerability to hurricanes, as well as an increasingly litigious environment that the Legislature can and should address. The last thing it needs is for Congress to tax something that it relies on more than any other state.

Christian R. Cámara is R Street’s Southeast region director and a senior fellow and co-founder of the institute.