The Coalition for Competitive Insurance Rates (CCIR) has released a statement in response to the tax plan recently revealed by Congress’s House Ways and Means Committee, arguing that the proposal to tax global reinsurers is “counterproductive” and could ultimately hurt American consumers.
“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,” the statement opened.
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“Pushing a Made-in-America requirement for insurance is counterproductive when it comes to disaster risk,” the CCIR explained, noting that foreign insurers would be hit the hardest by the proposed Disaster Recovery Assistance Tax.
“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,” it said. “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,” the industry group added.
The CCIR said that global reinsurers are expected to pay over 50% of the US losses from Hurricanes Harvey, Irma, and Maria. But under the Disaster Recovery Assistance Tax, consumer prices could surge by $100 per policyholder in some states in order to maintain the same level of coverage, thus negating any benefit consumers might have had through the plan.
“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,” CCIR stated.
“We call on lawmakers to put American consumers first – ax the disaster recovery assistance tax.”
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