Foreign Insurers Use Deceptive Scare Tactics to Preserve Unfair Tax Advantage

U.S. Coalition Corrects the Record with YouTube Video Rebuttal

WASHINGTON, DC (June 23, 2010) Responding to a recent video by foreign insurers riddled with errors and inaccuracies, the Coalition for a Domestic Insurance Industry (CDII) released a video rebuttal today to ensure Congress and consumers have the facts regarding H.R. 3424.

The bill, introduced by Representative Richard Neal, will close a loophole that enables offshore insurers to avoid billions in U.S. taxes.  

The coalition video rebuttal, found here, clarifies that:

  • Reinsurance transactions with affiliates do not add additional capacity to the market; they simply allow foreign-owned insurers to strip profits overseas into tax havens to avoid paying their fair share of U.S. taxes.
  • H.R. 3424 is not a new tax on foreign reinsurers. The legislation would merely close a loophole allowing U.S. subsidiaries of foreign-owned insurance groups to avoid taxes that apply to all U.S. companies.
  • H.R. 3424 will not affect insurance pricing or availability.  Foreign-owned insurers collectively represent less than 2% of homeowners insurance in all coastal states.  Taxes are already built into the prices consumers pay – foreign-owned insurers just get to pocket the extra profits.
  • The legislation will benefit consumers.  It will recapture an estimated $17 billion in revenue for the U.S. Treasury.  At a time of burgeoning federal deficits, and as American consumers and businesses face tax increases, it is wrong to allow foreign-owned insurers to avoid U.S. taxes on their U.S.-based business.
  • There will be no adverse impact on catastrophic claims paying ability as a result of the legislation, as third party reinsurers will continue to provide needed capital for catastrophes.
  • Statistics cited by foreign insurers regarding claims paid after Katrina, Rita and Wilma all involve third party reinsurance, which is not affected by H.R. 3424.

The rebuttal video may be viewed here.  For more information, please visit www.coalitionfordomesticinsurance.com.  Cathleen Mayrose, 212.683.0475; Karen Horvath, 203.629.3040.