The Obama administration is supporting legislation that would lead to higher taxes on foreign insurers. But the legislative change would not provide any favors for Americans, who would ultimately pay these taxes in the form of higher insurance costs. This is particularly true for those American residents living in coastal areas. Indeed, in Florida, where insurance prices are the highest in the nation and where insurers truly need reinsurance for protection against hurricane risks, the state’s Senate has just passed a memorial opposing the federal legislation.
In a letter to committee Chairmen Camp and Baucus, as well as ranking members Levin and Hatch, one coalition group pointed to widespread opposition by consumer organizations, analysts and academicians, noting that consumers will get stuck paying for the added costs. The proposal is supported by some domestic insurers who would be advantaged by the legislative change, and are the very same insurers opposing similar measures in other countries, the letter notes. Another irony is that the states with the highest insurance rates could be most at risk if this legislation is passed.
“While ACI cannot support or oppose legislation, it is clear that this legislative proposal, if enacted, will harm consumers by raising costs and discouraging them from buying property insurance,” comments Steve Pociask, president of the American Consumer Institute.