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Debate Begins on Bill to Limit Reinsurance Deductions

Rep. Richard Neal (D-Mass.) has introduced a bill, H.R. 3424, that seeks to limit tax deductions for reinsurers that cede large portions of their U.S....
July 21, 2010

Rep. Richard Neal (D-Mass.) has introduced a bill, H.R. 3424, that seeks to limit tax deductions for reinsurers that cede large portions of their U.S. premiums to offshore affiliates. During a hearing on the proposal by the House Committee on Ways and Means on July 14, Stephen Shay, an official with the Treasury Department, said that U.S. reinsurers already pay the tax so that the proposal would help them compete. Shay also said that the proposal would lower the incentive to use reinsurance to move profits offshore. Sean M. Shaw, Insurance Consumer Advocate for the State of Florida, told the Committee members why his office opposes the bill. Shaw and some of the 120 groups that oppose the bill say that it could raise annual premiums by $11 billion to $13 billion, including $800 million in Florida. "Quite simply, if you choose to impose a punitive tax on insurance, consumers will have less insurance," said Shaw. "And they'll pay more for it."

Reinsurance Tax Debate Heats Up (Insurance Journal 7/15/10)