The “Unintended Consequences” of the Neal Bill (HR 3424) A Proposed New Tax on Foreign Reinsurers.
In the video below, Swiss Re has done a marvelous job using new media to help advocate its position against “The Neal Bill” (HR 3424) that is aiming to impose a new tax on foreign reinsurers – something most of the stakeholders in the insurance industry are against.
The Risk and Insurance Management Society (RIMS), a nonprofit organization that represents risk managers (and publishes this blog … and pays my salary), is also firmly opposed due to the fact that any tax on the reinsurance industry will only be passed on first to the insurance industry and then to insurance buyers. Taxing reinsurers will also threaten capacity and make coverage harder to find at any price.
Speaking for RIMS, Scott Clark, risk and benefits officer for the Miami-Dade County School Board and a RIMS board liaison, said, “The group has always opposed proposals to restrict market access to insurance capacity.”
Mr. Scott called the legislation “a great threat to insurance capacity in the United States.”
“Over the past decade it has been proposed several times, not surprisingly, by a handful of U.S. insurers which seek to gain via a protected market that would allow them to charge higher prices,” Mr. Clark said.
Honestly, the changes proposed by this bill represent yet another example of how poorly Washington understands insurance. Advocates of the bill probably think they’re helping out insurance buyers by giving U.S. insurers an advantage. They’re not. No one — not reinsures, not insurers, not brokers, not commercial buyers, not personal line buyers — will benefit here.
And Swiss Re sums that all up perfectly in 140 seconds. (For more on the issue, you can check out www.KeepInsuranceCompetitive.com)