CCIR Objects to President Obama's FY 2012 Harmful Tax Proposal
For Immediate Release
Missi Tessier, Podesta Group
202.393.1010 | firstname.lastname@example.org
CCIR Objects to Harmful Tax Proposal in 2012 Budget
Washington, DC (February 14, 2011) — The Coalition for Competitive Insurance Rates (CCIR) today objected to a proposal in the FY 2012 budget that would deny a tax deduction for certain reinsurance premiums paid to foreign-based affiliates by domestic insurers. CCIR and a number of its allies today sent a letter to the chairmen and ranking members of the Senate Finance Committee and House Ways and Means Committee detailing the negative consequences of this proposal.
“The Administration’s decision to target this vital part of our insurance infrastructure is misguided,” said John Phelps, director, business risk solutions, Blue Cross and Blue Shield of Florida, Inc. and board liaison, Risk and Insurance Management Society, Inc., External Affairs Committee. “This proposal puts at risk insurance support for many of the businesses and organizations driving our nation’s economic recovery. Similar proposals have been defeated in the previous years because Congress has listened to the objections of consumer groups, public officials, trade experts, business leaders, elected officials, and others. Instituting this tax would significantly reduce America’s ability to manage volatile, catastrophic insurance risk, whether it involves natural disasters like hurricanes or manmade ones like terrorist attacks.”
Similar to a proposal backed in the 111th Congress by Rep. Richard Neal (D-MA), this tax targets the foreign insurers who provide large quantities of insurance and reinsurance coverage to Americans. The US insurance market relies on an international network of reinsurance companies to meet the country’s insurance coverage needs. Nearly two-thirds of all reinsurance required to protect US consumers and businesses is provided by non-US reinsurance companies or their affiliates.
A study of Rep. Neal’s proposal conducted by economic researchers at The Brattle Group demonstrated that this tax could have tremendous negative consequences in some of our nation’s most vulnerable areas. Consumers in states with high risks for natural disasters, like Florida, Louisiana and California, already struggle to properly insure homes and businesses. Taxing the companies who provide much needed capital in these areas would raise prices and reduce capacity, leading to higher costs and less coverage.
“US consumers, whether they know it or not, rely on the international insurance market to protect their homes and businesses,” said Bill Newton, executive director of the Florida Consumer Action Network. “Our legislators have a responsibility to make sure that their constituents can afford to conduct business and protect their families. Supporting this budget proposal would be a violation of that responsibility. Given today’s financial and economic conditions, now is certainly not the time to make access to insurance more costly.”
“The efforts to impose enormous new tariffs on non-U.S. insurers are anti-market, anti-competitive and bad for consumers. The White House proposal just isn’t good public policy,” says Eli Lehrer, Vice President of the Heartland Institute.
The Coalition for Competitive Insurance Rates is made up of business organizations, consumer advocacy groups, insurers and their associations.
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