Florida House of Representatives Federal Affairs Subcommittee Passes HM 617, Urging Congress to Oppose New Taxes Limiting the Use of Foreign Reinsurers
Mar 28, 2011
The Florida House of Representatives Federal Affairs Subcommittee favorably passed HM 617 Relating to Discriminatory Taxes/Reinsurance during its meeting today, March 28, 2011. HM 617 is sponsored by State Representative Jeff Brandes (R-St. Petersburg) and cosponsored by State Representative Bryan Nelson (R-Apopka). HM 617 is a memorial to the United States Congress, urging Congress to oppose any effort to impose new discriminatory taxes that would significantly limit the use of foreign reinsurers.
As background, President Obama and Congress have made recent attempts to diminish the tax deduction claimed by domestic subsidiaries of insurance companies on reinsurance premiums paid to their foreign affiliates. In opposition, some argue that such tax increases will result in less access to property and casualty insurance in high-risk catastrophic markets like Florida, as well as result in higher premiums. Moreover, according to a July 29, 2010, letter from Florida Insurance Commissioner Kevin McCarty to Congressman Gus Bilirakis against the federal initiatives, Commissioner McCarty emphasized that, “Florida, more than any other state, relies on the international insurance markets to manage its property catastrophic risk. The ability to diversify catastrophic risk across the globe allows international insurers and reinsurers to provide more capacity at a lower price than otherwise would be possible.”
After introduction of the memorial by Representative Brandes during today’s meeting, significant debate ensued both in support of, and in opposition to HM 617. Testimony in opposition against HM 617 included lengthy statements from representatives on behalf of Chubb Group of Insurance Companies and Capital Tax Partners, who urged Florida legislators to reject HM 617 and to support federal efforts to close the federal “loophole” and “level the playing field.” Representative Brandes closed by reading the above quoted paragraph from Commissioner McCarty’s letter, a vote was taken and HM 617 passed favorably.
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