OFII opposes measures that seek to limit the ability of U.S. reinsurance subsidiaries to deduct legitimate business expenses. These provisions would violate fundamental international tax principles and discourage U.S. subsidiaries, which are already incorporated in the U.S. and subject to all the same laws as U.S. based companies, from selling reinsurance in the U.S. Consequently, this would reduce the availability of reinsurance and raise the price on premiums for U.S. consumers – particularly in hard-hit disaster areas like the hurricane-prone Gulf Coast and earthquake-prone California, where global reinsurers tend to specialize.
Legislation to limit U.S. subsidiaries of foreign-based reinsurance companies from deducting non-taxed reinsurance premiums paid to their foreign affiliates has been introduced by Rep. Richard Neal (H.R. 2054) and Senator Robert Menendez (S. 991). The Administration’s FY 2014 budget (page 62) also includes similar provisions.
Previous versions of these proposals were seen in the Administration’s FY 2013, FY 2012, and FY 2011 proposed Budgets and in legislation introduced by Rep. Neal in the 112th (H.R. 3157), 111th (H.R. 3424), and 110th Congresses (H.R. 6969).
OFII Comments on Reinsurance Hearing, July 2010
OFII Letter to Senate Finance Committee, February 2009