FACTA announcements offer mixed bag for insurers, says E&Y

The proposed Fair and Accurate Credit Transactions Act (FACTA) presents a significant challenge for insurers, despite the concessions that the Internal Revenue Service (IRS) has made for the industry.

This is the opinion of Peter Frost, senior tax manager at Ernst and Young, who believes that the IRS’s recent announces on FACTA offer a mixed bag for insurers.

“The de minimis limit of $250,000 for existing contracts shows that the IRS has listened to the industry, as does the removal of the definition of private banking and the increase of the threshold for detailed reviews of accounts to in excess of $1m,” he says.

“There have also been some disappointments. For example, it is less than ideal that the regulations demand that FATCA compliance procedures are certified by the insurer as FFI, as a lot of effort has been directed towards assisting the US authorities in understanding how intermediaries are used extensively in distributing Life insurance products around the world.”