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IT A PROTECTIONIST OVE THAT WOULD LAYING FIELD?


S A


THE COALITION FOR A DOMESTIC INSURANCE INDUSTRY


bill is being discussed by US politicians that could result in a new tax on the foreign affiliates of US insurers.


The bill is proposed by Richard Neal, a Democrat member of the House


of Representatives, who is an influential figure in economic policy due to his membership of the House Ways and Means Committee and his position as chairman of the Subcommittee on Select Revenue Measures.


However, Neal has failed on two previous attempts to implement similar measures and close what he perceives to be a tax loophole for some foreign- based reinsurers.


Neal’s proposals, enshrined in the Neal Bill HR 3424, are described as: “To amend


the Internal Revenue Code of 1986 to disallow the deduction for excess non-taxed reinsurance premiums with respect to United States risks paid to affiliates.”


‘Reinsurance paid to affiliates’ refers to reinsurance coverage provided


internally among a group of insurers with some common ownership interests. Voices in support of Neal’s proposal include such prominent names as


William Berkley and John Degnan, vice chairman and chief operating officer of the Chubb Corporation. A lobby group called the Coalition for a Domestic Insurance Industry (CDII) has been formed in support of the Neal Bill, including large US-based insurers and reinsurers.


On the other hand, some US insurers are opposing the bill and backing a


rival lobby group—the Coalition for Competitive Insurance Rates (CCIR), which is also backed by US consumer groups, captive associations and the Risk and Insurance Management Society. A number of state insurance commissioners have also voiced their opposition to the bill.


November 2010 | INTELLIGENT INSURER | 31


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