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.

Thursday
Sep292016

Warner-Neal Foreign Reinsurance Legislation Opposed by Bipartisan Coalition 

Bills would stifle competition and consumer access to affordable insurance

Washington, DC (September 29, 2016) -- The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today vocalized their disapproval of legislation introduced by Sen. Mark Warner (D-VA) and Rep. Richard E. Neal (D-MA) (S. 3424 and H.R. 6270) to raise taxes on foreign-based companies providing reinsurance to US affiliates. Despite strong opposition from concerned insurers, business, industry and consumer groups and elected officials, this legislation marks the fourth time Rep. Neal has sought to impose this special punitive tax.

“Foreign-owned reinsurers don’t enjoy any US tax loopholes,” said Tom Feeney, president and CEO of Associated Industries of Florida. “Right now, the US subsidiaries of these companies are subject to the same income tax laws as their US-based competitors – there is no differential or preferential treatment. By limiting US domestic insurance capacity, Sen. Warner and Rep. Neal will only succeed in driving up costs, placing a huge burden on homeowners and businesses, particularly those in areas that are vulnerable to devastating weather events or other significant catastrophes.”

The legislation introduced by Sen. Warner and Rep. Neal would defer or deny a deduction for certain reinsurance premiums paid by a US insurer to an international affiliate by imposing an unnecessary and costly tariff on the companies that help spread insurance risks globally – unduly harming American consumers and businesses. A 2015 report issued by the Tax Foundation on the consequences of a tax on the foreign reinsurance industry found that United States’ GDP would experience $1.35 billion in losses over the long term, which is approximately twice the revenue it would collect. In an economic impact study of previously introduced legislation by Rep. Neal, the Brattle Group, a leading economic consulting firm, found such legislation would reduce the net supply of reinsurance in the US by 20 percent, forcing American consumers to pay a total of $11 to $13 billion a year more for their same coverage.

Recognizing the economic disadvantage of this and similar legislation, state and federal officials from across the political spectrum have spoken out against reinsurance tax proposals. Current and former state insurance commissioners representing Florida, Georgia, Louisiana, Mississippi, Nevada, North Carolina, Pennsylvania, South Carolina and Utah have publicly criticized the measures, as have agriculture commissioners from Florida, North Carolina and Tennessee, and Florida Governor Rick Scott.

“A tax on affiliate reinsurance will stifle innovation in an important industry and drastically reduce competition in the marketplace,” said Pete Sepp, president of the National Taxpayers Union. “American consumers and companies benefit from a competitive, secure insurance market, as do taxpayers. Global reinsurers are financially strong and have substantial capacity to support US insurance companies, allowing our communities to recover more quickly from disasters with fewer government aid dollars.”

Overseas reinsurance companies are the largest providers of US property catastrophe reinsurance and also provide catastrophe-exposed insurance via US subsidiaries. Foreign reinsurers paid nearly 50 percent of the estimated $19 billion in losses incurred from Hurricane Sandy; an estimated 85 percent of privately insured crop losses resulting from the 2012 drought (approximately $1.2 billion) were paid by international reinsurers; and, in the aftermath of the 2001 terrorist attacks on New York, international insurance and reinsurance firms paid 64 percent of the estimated $27 billion in US payouts for the claims.

“Over the years, international insurance companies and their US subsidiaries have supported the US in the wake of our nation’s most tragic and costly disasters,” said Eli Lehrer, president and co-founder of the R Street Institute, a free-market think tank. “If affiliate reinsurance is taxed at a higher rate, companies may substitute non-affiliate reinsurance or reduce their US customer base. And, if the available supply of reinsurance shrinks, or markets become less competitive prices will rise – a losing equation.”

The Warner-Neal legislation closely resembled a provision in President Obama’s FY 2017 budget that would deny a routine business tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers – the seventh attempt by the president to introduce this specific budget recommendation.

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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 www.keepinsurancecompetitive.com.

Media Contact:

Emily Flynn Pappas

Podesta Group

202-448-5208

epappas@podestagroup.com

Tuesday
Feb092016

FY 2017 Budget Provision to Tax Foreign Insurers Opposed by Bipartisan Coalition 

President’s budget would reduce competition and consumer access to affordable insurance

Washington, DC (February 9, 2016) -- The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today condemned an inequitable provision in President Obama’s FY 2017 budget that would deny a routine business tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers. This is the seventh attempt by the president to introduce this specific budget recommendation, despite fervent opposition to the proposal in previous sessions.

“These reinsurance tax schemes are writ large attempts at special interest protectionism,” said top economist Arthur Laffer, who in 2015 published a study, "Do We Want Special Interest Trade Protectionism in the Tax Code?," that warns that what amounts to a reinsurance tariff would result in a capital reduction of nearly $10 billion, as well as a further drop in GDP due to foreign trade retaliation. “Denying this standard business expense deduction will push firms out of the marketplace, reducing coverage and increasing costs for consumers.”

President Obama’s budget measure, which closely resembles legislation (H.R. 2054 and S. 991) proposed in the 113th Congress by Reps. Richard Neal (D-MA) and Bill Pascrell (D-NJ) and Sen. Robert Menendez (D-NJ), would result in a tax increase  on reinsurance companies responsible for maintaining affordable business and consumer access to insurance by spreading risks globally. This proposal has remained under active consideration in Congress, having been included in former Ways and Means Committee Chairman Dave Camp’s (R-MI) tax reform legislation (H.R. 1) in 2014; but it was not proposed by the Senate Finance Committee’s International Tax Reform Working Group in 2015.

In a letter sent today from CCIR to the chairmen and ranking members of the US Senate Finance and House Ways and Means Committees, 31 concerned insurers, business, industry and consumer groups expressed anxiety over the unintended probable consequences of such proposals.

“A tax on foreign affiliate reinsurance will stifle the reinsurance industry and drastically reduce competition in the marketplace,” said Tom Feeney, president and CEO of Associated Industries of Florida, a signatory of the CCIR letter. “Limiting U.S. domestic insurance capacity will drive up costs, placing a huge burden on homeowners and businesses. This tax would benefit few at the expense of many, including home owners, insurance companies and small business owners.”

A growing chorus of state and federal officials from across the political spectrum has vocally opposed the reinsurance tax proposals. Current and former state insurance commissioners representing Florida, Georgia, Louisiana, Mississippi, Nevada, North Carolina, Pennsylvania and South Carolina have publicly criticized the measures, as have agriculture commissioners from Florida, North Carolina and Tennessee, and Florida Governor Rick Scott.

A 2015 report issued by the Tax Foundation on the consequences of a tax on the foreign reinsurance industry found that United States’ GDP would experience $1.35 billion in losses over the long term, which is approximately twice the revenue it would collect. In an economic impact study of previously introduced related legislation by Rep. Neal and Sen. Menendez, the Brattle Group, a leading economic consulting firm, found such legislation would have reduced the net supply of reinsurance in the US by 20 percent, forcing American consumers to have paid a total of $11 to $13 billion a year more for their same coverage.

As the Laffer study concludes, “Good tax reform promotes a tax code with the lowest possible tax rate on the broadest possible tax base. Instead, the Obama/Menendez/Neal proposal to eliminate the deduction for foreign reinsurance premiums follows the exact opposite path, applying a high tax rate to a very narrow tax base – a targeted and specific industry. The known result—surely accompanied by a number of unanticipated consequences as well—will be that domestic insurers use less foreign affiliate reinsurance, which will result in less tax revenue than expected and more expensive, less effective insurance.”

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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 www.keepinsurancecompetitive.com.

Media Contact:  
Emily Flynn Pappas  
Podesta Group  
202-448-5208  
epappas@podestagroup.com

 

Thursday
Jul092015

Bipartisan Coalition Disappointed In Senate Finance Working Group’s Failure to Dismiss Protectionist Measure

he Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today remains cautiously optimistic of the Senate Finance Committee’s treatment of foreign affiliate insurance companies in corporate tax reform following the release of a final report by the International Tax Reform Working Group issued by Finance Committee co-chairs Rob Portman (R-OH) and Charles Schumer (D-NY).

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Friday
May152015

Study: Tax Reform Should Not Push Special Interest Trade Protectionism

CCIR today endorsed a newly-released report by Laffer Associates which finds some provisions of past comprehensive corporate tax reform proposals and proposals under review by both the Senate Finance and House Ways and Means Committees to simply be "bad tax reform."

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Wednesday
Feb182015

Study: Reinsurance Tax Proposal Pushes Anti-Growth Agenda

The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today endorsed the findings of a newly-released economic study by the Tax Foundation forecasting considerable and unintended macroeconomic consequences associated with recent proposals to eliminate the deductibility of foreign reinsurance premiums.

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Monday
Feb022015

Bipartisan Coalition Rejects Costly Tax Proposal in FY 2016 Budget

The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today roundly objected to a discriminatory proposal in President Obama’s FY 2016 budget that would deny a tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers.

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Wednesday
Oct152014

Kading: Global Regulatory Standards, Protectionist Measures a Risk to Business

In remarks delivered during the “Regulation as a Business Risk” conference at St. John’s University in New York City on Oct. 15, Brad Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), the association representing the interests of 21 commercial insurers and reinsurers with underwriting operations in Bermuda, cited both international insurance regulatory standards and various protectionist measures as posing a risk to global business.

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Wednesday
Oct082014

Kading: Smart Government Investments in Resilience Save Taxpayers Dollars and Protect Citizens

In comments delivered at the Northeast Risk and Resilience Leadership Forum, Brad Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), the association representing the interests of 21 commercial insurers and reinsurers with underwriting operations in Bermuda, highlighted the projects governments should “green-light” to provide the maximum benefit to voters and policyholders alike.

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Tuesday
Mar042014

State Officials, Consumer Advocates Reject a Discriminatory Tax Proposal in FY 2015 Budget

The Coalition for Competitive Insurance Rates (CCIR), the leading voice for continued and increased competition within the insurance industry, today objected to a proposal within the Obama administration’s FY 2015 Budget that would deny a tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers.

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Tuesday
Jul232013

Governor Rick Scott: Reinsurance Tax Legislation May Have Disastrous Impact on Florida Families, Businesses

WASHINGTON, DC (July 23, 2013) – Florida Governor Rick Scott joined a growing chorus of state and local officials this week in voicing strong opposition to legislation that would deny tax deductions for certain reinsurance premiums paid to foreign-based affiliates of domestic insurers.

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