The Coalition for Competitive Insurance Rates (CCIR) have objected to a proposal within the Obama administration’s fiscal year 2015 budget that would deny a tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers. Should the proposal carry through, captive managers and owners in the US could be among those affected.
President Obama’s budget proposal closely resembles legislation introduced by Representatives Richard Neal and Bill Pascrell and Senator Robert Menendez in the 113th Congress, which, according to a previous analysis, will drastically raise insurance rates across the country.
The Brattle Group, an economic consulting firm, found in an economic impact study of the past proposals that the proposed tax would reduce the net supply of reinsurance in the US by 20 percent. This would force American consumers to pay a total of $11 to $13 billion more per year for the same coverage they currently have.
A growing list of consumer advocates, state officials, risk specialists, insurance industry experts, trade negotiators and business organisations have publically opposed the tax on foreign reinsurers.
