Parts of Obama Budget Spark Debate Over Cost, Availability of Insurance
R.J. Lehmann, a senior fellow at the R Street Group, a libertarian think tank, said in a statement that it “represents a protectionist and economically destructive tax that would benefit a small group of domestic insurance companies at the expense of U.S. consumers.”
Lehmann said that the costs of the proposal “far exceed the revenue it would generate, and its ultimate effect would be to drive reinsurance capital—so sorely needed in catastrophe-prone states like Florida, Louisiana, Texas and California—out of the country.”
He said in addition to making reinsurance more costly and limiting access to the global reinsurance industry, which allows catastrophe insurance to function by pooling a wide variety of different kinds of risks from around the world, the proposal is unnecessary.
Cross-border reinsurance transactions are already subject to a tariff and the Internal Revenue Service has the authority to disallow any reinsurance transactions that don’t involve a genuine transfer of risk, he said.