From Market Watch:
The Coalition For A Domestic Insurance Industry, a group of 14 major U.S.-based insurance groups, applauds the introduction of a bill by Rep. Richard Neal (D – Mass.) to level the playing field and close the current loophole that provides foreign-based insurers a competitive advantage over domestic insurers in underwriting U.S. risks. This unfair tax advantage arises because foreign insurance groups operating in the U.S. are presently allowed to strip the bulk of their profits out of the U.S. merely by reinsuring risks to affiliates located in tax havens, and thus avoid paying billions of dollars in U.S. taxes. The tax treatment of these transactions undermines the ability of domestic companies to compete and ultimately threatens the future of our domestic insurance industry.
"The tax advantage, which originated in practice around 20 years ago, has already caused significant migration of insurance capital abroad," explained William R. Berkley, chairman and chief executive officer of W. R. Berkley Corporation and spokesman for the Coalition For A Domestic Insurance Industry.
Growth in related-party reinsurance written to foreign affiliates has been dramatic. In 2007, $58.4 billion of U.S. premiums went to foreign insurance companies, with nearly 60 percent ($33.8 billion) of those premiums going to related foreign reinsurance companies. Since 1996, U.S. premiums going to affiliated foreign reinsurers have increased at a compound annual growth rate of 21.4 percent.
