Florida Lawmakers Protest Neal Bill

Republican lawmakers from Florida have joined with the Association of Bermuda Insurers & Reinsurers to renew concerns about the potential high cost of raising US taxes on offshore insurers.

In a letter to the leadership of the Congressional Ways and Means Committee, nine members of the Florida Congressional delegation asked the tax-writing panel to oppose the establishment of a punitive tax on reinsurance.

Brad Kading, ABIR’s president, made the same point during a speech in Georgia. ABIR is the public policy arm of Bermuda’s global reinsurance industry with offices both here and in Washington DC.

“We are suffering through a global debt crisis; the wisest public policy is to maximise private sector risk bearing,” he said to a real estate market and property insurance conference hosted by the Atlanta Federal Reserve Bank.

Industry journal “Property Casualty 360″ reports the Florida legislators and Mr. Kading made their comments out of concern that provisions to raise taxes on foreign insurers would be on the minds of legislators as they seek to offset tax cuts and deficit reduction proposals now working their way through Congress.

“For example, Congress is now working on legislation that would extend bills to bar implementation of the alternative minimum tax, according to industry officials. The break expires December 31,” said the re/insurnace journal. “Democrats are also pushing legislation that would extend the ban. But the party appears to be making an exception for renewing and extending a tax break on payroll taxes that is also set to expire at the end of this year.

“And the Florida legislators also said the bill recently tabled by Massachusetts Congressman Richard Neal would ‘lead to higher premium costs for citizens of Florida, and the rest of the nation’ …”

That legislation is aimed at closing the so-called “Bermuda loophole” allowing foreign-based insurers with US subsidiaries to cede premiums on their US risk to their offshore units, thereby reducing their taxes.

The Obama administration has also proposed legislation aimed at closing the loophole, but the revenue gained from the White House  proposal would be far less than what the Neal bill proposes. The Neal bill would impose a tariff on international reinsurance firms, reversing current policies that allow insurance companies based in the United States to claim a deduction on their corporate tax return for the amount of reinsurance premiums paid to a foreign affiliate.

Signing the letter were Florida Congressmen Dennis Ross, David Rivera, Bill Posey, Sandy Adams, Jeff Miller, Mario Diaz-Balart, Gus Bilirakis, Ander Crenshaw and Illeana Ros-Lehtinen.

The letter was sent to Congressmen Dave Camp and Sander Levin, chairman and ranking minority member of the House Ways and Means Committee, the Republican members of the Florida delegation said that Neal bill’s “punitive and anti-competitive taxes” would result in “a less secure property insurance market.”

The letter also said that “this proposal will, in the long term, do nothing to foster economic growth or make the United States an attractive place to do business.”

In his comments, Mr. Kading said that despite more than $80 billion in global property catastrophe losses for 2011, the commitment of reinsurance markets to the US remains stronger than ever, with ample capacity to meet the demands of US insurers.

#ABIR #AmericanPoliticians #AmericanRelations #BermudaBusiness #BermudaInsurance

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