WASHINGTON, DC (November 2, 2017) – Today the Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, released the following statement in opposition of a proposal included in the tax plan released today by the House Ways and Means Committee:
“As Texas, Florida and other states as well as Puerto Rico continue efforts to rebuild in the wake of Hurricanes Harvey, Irma and Maria, it is unfathomable that the House Ways and Means Committee – chaired by Texas Republican Kevin Brady – would propose in its tax plan a measure that will shrink competition in the insurance marketplace and increase the cost of insurance coverage for consumers. This proposal runs directly counter to the position taken by the Trump Treasury last Friday, in a report on insurance and global regulation that advocated for global competition in local insurance markets as critical to ‘better risk management and possibly higher economic growth rates, which could be reached through a more open approach to foreign insurers and investment.’
Pushing a Made-in-America requirement for insurance is counterproductive when it comes to disaster risk. When it comes to extreme risk, all insurance companies, US and foreign-based, use reinsurance in order to most efficiently and safely pool catastrophic and other risks and match capital to support those risks. Such pooling diversifies risk into a global portfolio providing substantial price and capacity benefits to insurance markets globally.
Taxing global reinsurers as a means to provide a competitive advantage to US-based insurance companies is a very risky and unnecessary move. Global insurers and reinsurers will likely contribute 60% of total payments from Hurricanes Harvey, Irma, and Maria. And, as with past large natural disasters, it is expected that global reinsurers will pay more than 50% of the US losses from this trio of storms. Under the plan proposed by the House Ways and Means Committee today, consumer prices will jump by $100 per policyholder in some states in order to maintain this same level of coverage – a price tag that could negate the benefit of any individual tax cut for many Americans.
While the goal of advancing meaningful tax reform is to be commended, inclusion of a proposal to tax the global reinsurance market will raise revenue at the expense of American homeowners and businesses who continue to struggle from recent natural disasters. We call on lawmakers to put American consumers first – ax the disaster recovery assistance tax.”
Category: News and Resources