By Will Koblensky
Taxing foreign reinsurers taking on risk from their US affiliates would reduce the supply of insurance, increase costs for clients and is particularly negative for the P&C market according to a report by economic consultancy, The Brattle Group.
A drop in reinsurance supply is estimated at 13% nationwide or an aggregate decrease of $18.3 billion. This would lead to costs going up for consumers, Brattle said, by $5 billion annually.
The tax being considered by Congress is meant as a punitive measure and The Impact of Offshore Affiliate Reinsurance Tax Proposals on the US Insurance Market study found reinsurance structures are paramount in natural disaster coverage.
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