***RIMS' latest letter to the Senate Finance Committee can be viewed here.***
Reinsurance Tax Would Stifle Insurance Capacity and Increase Costs
NEW YORK (December 4, 2013) – RIMS, the risk management society™, strongly opposes a draft tax reform proposal floated by the Chairman of the Senate Finance Committee that would eliminate the tax deduction for reinsurance premiums ceded by domestic insurers to their foreign affiliates.
“This is not an area where the government should look to increase tax revenue,” said Carolyn Snow, RIMS Board Director. “Penalizing reinsurers would place a significant burden on U.S. businesses and the public. The ripple effect of this decrease in capacity for acts of terrorism, natural disasters, and other risks would force many to forgo new business opportunities and investments – a predicament that could significantly stunt the global economy.”
In April, RIMS President John Phelps sent a letter to the House Committee on Ways and Means on this issue. The letter included:
· background information on the proposed budget item;
· an exploration of the economic impact of the proposal; and
· information highlighting the proposal’s propensity to violate the United States’ commitment to international businesses.
In the letter, Mr. Phelps states, “The Administration’s Proposed 2014 Budget’s effort to eliminate the tax deduction for reinsurance premiums ceded by domestic insurers to foreign affiliates would have a chilling effect on the use of foreign reinsurance. As a result, the availability of coverage would be reduced and costs for consumers would increase significantly, particularly in urban areas subject to terrorism risk and areas prone to natural disasters.”
To read the full letter, click here.
For more information about RIMS External Affairs initiatives or about the RIMS International Committee, visit www.RIMS.org.