RISK AND INSURANCE MANAGEMENT SOCIETY OPPOSES
HARMFUL TAX PENALTY ON REINSURERS
Legislation Would Disrupt Insurance Market & Increase Insurance Prices
NEW YORK (October 14, 2011)—The Risk and Insurance Management Society, Inc. (RIMS) voiced its opposition to legislation introduced by Rep. Richard Neal (D-MA) and Senator Robert Menendez (D-NJ) that would place significant restrictions on domestic insurers which cede reinsurance to their foreign affiliates.
According to RIMS, the proposed legislation would disrupt the global insurance marketplace, making commercial insurance less available and affordable to U.S. consumers. The scope of the bill would impact a majority of the industry, but particularly consumers in areas of the country subject to natural disasters as well as terrorism risks.
“The proposed bills are serious threats to small and large businesses, universities, hospitals, and public entities—all of which purchase significant amounts of commercial property and casualty insurance,” said John Phelps, board liaison to RIMS External Affairs Committee and director, business risk solutions, Blue Cross and Blue Shield of Florida, Inc. “By disallowing the tax deduction for reinsurance premiums ceded by U.S. insurers to offshore affiliates, the legislation will inevitably dismantle a legitimate practice in risk management which facilitates the shifting and pooling of a variety of risks from a domestic insurer to an affiliate reinsurer.”
Phelps added, “During this period of consumer uncertainty and economic fragility, now is not the time for tinkering with this provision of the tax code especially when economists forecast that a change could cost individual and commercial consumers over $10 billion a year.”
About the Risk and Insurance Management Society, Inc.
As the preeminent organization dedicated to advancing the practice of risk management, the Risk and Insurance Management Society, Inc. (RIMS) is a global not-for-profit organization representing more than 3,500 industrial, service, nonprofit, charitable and government entities throughout the world. Founded in 1950, RIMS brings networking, professional development and education opportunities to its membership of more than 10,000 risk management professionals who operate in more than 120 countries. For more information on RIMS, visit www.RIMS.org.