How a border tax could cut $24.6 billion in insurance sales
With a system that would tax imports and with reinsurance being an international business, US insurers – whose reinsurance is mostly bought overseas – could be looking at billions of losses in insurance sales.
In an opinion piece published on The Hill, Ian Adams – associate vice president for state affairs with the R Street Institute – said the proposed border-adjustment tax would make it costlier for US life insurers to buy reinsurance. He explained that this would hurt insurers’ access to capital, making their products less affordable.
According to a study from the R Street Institute, there would be a $59 billion rise in the lifetime costs of typical life insurance and annuity policies if effects of the border-adjustment tax are factored in. This, in turn, would lead to a potential sales loss of $24.6 billion.Adams also cited other proposed tax changes that would make reinsurance pricier – reciprocal tax, territorial tax, and discriminatory tax.
