RIMS Opposes H.R. 6969 Taxing Legislation

The Risk and Insurance Management Society, Inc. (RIMS) announced its opposition to legislation disallowing tax deductions for reinsurance premiums paid to foreign affiliates that exceed the industry average for each line of property and casualty insurance business. The legislation, H.R. 6969, was introduced on Friday by Rep. Richard E. Neal, D-Mass., a senior member of the U.S. House of Representatives Committee on Ways and Means (dailyinsurer.blogspot.com/2008/09/coalition-applauds-bill-to-level.html).

“RIMS opposes any legislation that would result in negative implications for the global reinsurance marketplace and U.S. businesses that rely on this market,” said Terry Fleming, member of RIMS board of directors and director of the division of risk management for Montgomery County, Maryland. “It is RIMS belief that a free and fair marketplace fosters a healthy and competitive climate for reinsurance while at the same time assures more available and affordable property and casualty insurance.”

Under the current tax code, the law permits insurers to deduct reinsurance premiums paid to affiliate foreign reinsurers without any limitations. The legislation would place an artificial cap on the deduction, potentially causing market disruptions. Over the years, non-U.S. reinsurers have served as an important backstop ensuring the availability of insurance, particularly in areas prone to natural disasters. RIMS opposed similar legislation in 2001 and 2007.