Business Wire - Washington
July 14, 2010
WASHINGTON--(BUSINESS WIRE)--The Coalition for Competitive Insurance Rates (CCIR) today applauded Florida Insurance Consumer Advocate Sean Shaw’s statements in opposition to Rep. Richard Neal’s (D-MA) plan to tax foreign-based insurers and reinsurers. During a hearing held by the House Committee on Ways and Means, Shaw expressed concerns that Neal’s proposal would have damaging effects on consumers in Florida and other disaster-prone areas and echoed opposition from consumer advocates, trade experts, economists, business leaders and others.
“On behalf of consumers in Florida and all across America, I ask you to reject this tax by recognizing that it will do nothing more than increase the pricing power of a handful of large and already hugely profitable insurers who want to put a crimp on their competitors.”
In his testimony before the House Ways and Means Subcommittee on Select Revenue Measures, Shaw pointed to recently released data that predicted that Neal’s plan could increase insurance costs nationwide by $11 - 13 billion.
“Especially in hard times, international insurers and reinsurers are indispensable for high-risk states such as Florida and for a heavily populated, highly industrialized, and increasingly vulnerable nation, such as the United States,” said Shaw. “On behalf of consumers in Florida and all across America, I ask you to reject this tax by recognizing that it will do nothing more than increase the pricing power of a handful of large and already hugely profitable insurers who want to put a crimp on their competitors.”
Rep. Neal’s proposal would tax the foreign-based reinsurers who provide a significant percentage of reinsurance coverage in the United States, and who have a strong presence in the nation’s most vulnerable, disaster-prone areas like Florida, the Gulf Coast, and California. According to a study released earlier this month by economists at the Brattle Group, consumers living in Florida would be especially hard hit by cost increases from the Neal bill, paying an additional $266 million to insure their homes and $264 million to insure their commercial properties.
“The insurance commissioners in Louisiana, Mississippi, North Carolina and South Carolina all oppose this tax increase. These insurance regulators protect the public. Because they are responsible for approving affiliated reinsurance transactions, they understand that the purpose of these transactions is insurance risk management. They know that, on average, domestic reinsurers use affiliated reinsurance to the same degree or more than foreign insurers,” said Shaw, highlighting the strong opposition to this plan.
“In Florida, more business would flow into our already-troubled Citizens Property Insurance Corporation. More demands would be placed on the taxpayer-subsidized Florida Hurricane Catastrophe Fund. Other states would suffer similar challenges. That is why more than 120 opponents of HR 3424 and similar measures have written to Congress emphatically expressing their disagreement. These opponents – many of whom agree on little else -- include state legislators and other public officials from both parties, consumer advocates, leaders from the insurance industry, and the business community.”
Shaw’s testimony reiterated the concerns voiced by CCIR and the many individuals who have made their opposition to the Neal bill clear. Despite widespread concern surrounding raising taxes on the invaluable global network of companies who help to protect our properties and livelihoods, the Neal bill continues to be advocated for by a small group of powerful, profitable companies who stand to benefit from a less competitive insurance marketplace.
The Coalition for Competitive Insurance Rates is made up of business organizations, consumer advocacy groups, insurers and their associations.