Posted on 08 Feb 2010
A coalition of 13 US insurance groups have voiced support for president Barack Obama's proposal to cut what it sees as offshore tax avoidance. The coalition has urged legislation to be passed quickly.
"The president's proposal is a good start," said William Berkley, chairman and CEO of US insurer W R Berkley Corporation. “We now call on congress to pass the Neal bill and end hurtful tax loopholes that for years have benefited foreign-controlled insurance companies and created a competitive disadvantage for insurance companies based in the United States.”
In July 2009, Richard Neal, a Democratic representative, introduced a bill in the US House of Representatives that would increase taxes on all foreign insurers who have US subsidiaries.
Bermuda companies claim changing the tax laws would reduce reinsurance capacity in the US and drive up the cost of premiums for insurers.
But the coalition asserts legislation is essential to close what it says is a law loophole that permits foreign-controlled insurers to avoid paying billions of dollars in US taxes. “At a time of burgeoning deficits and possible tax increases on US workers and businesses, it seems unfathomable that we would continue to allow foreign-based insurers to avoid US tax on their US-based business. It is time to close this loophole and prevent further erosion of our tax base,” writes The Coalition for A Domestic Insurance Industry on its website.
“This loophole provides foreign-controlled insurers a significant tax advantage over their domestic competitors in attracting capital to write US business. There is no credible reason why the United States tax system should favour foreign-owned groups over domestic insurers in selling insurance in the United States,” the group said.
The thirteen groups in the coalition are: Ambac Financial Group, American Financial Group, WR Berkley Corporation, Berkshire Hathaway, The Chubb Corporation, EMC Insurance Companies, The Hartford Financial Services Group, Liberty Mutual Group, Markel Corporation, MBIA, Scottsdale Insurance Company, The Travelers Companies and Zenith Insurance Company.
John Degnan, COO of The Chubb Corporation, in a statement: “The president’s proposal brings much needed attention and momentum to this issue that for years has created an uneven economic playing field,” stated. “In this time of economic crisis, we cannot afford to give foreign-controlled insurers continued tax breaks. They should not be allowed to avoid taxes at a time when others are being asked to contribute to our nation’s economic recovery.”