RIMS warns of chilling effects of 2014 budget

The Risk and Insurance Management Society (RIMS) has written to US government officials disagreeing with the Administration’s Proposed 2014 Budget that includes an effort to eliminate the tax deduction for reinsurance premiums ceded by domestic insurers to their foreign affiliates.

The letter, submitted by RIMS President John Phelps, says the bill could violate the US’s commitment to international businesses. It also includes background information on the proposed budget item and explores the impact the item would have on consumers as a result of the decreased availability and increased prices of insurance.

The letter was delivered to the House Ways and Means Committee’s International Tax Reform Working Group.

“The Administration’s Proposed 2014 Budget’s effort to eliminate the tax deduction for reinsurance premiums ceded by domestic insurers to foreign affiliates would have a chilling effect on the use of foreign reinsurance,” warned Phelps in the letter.

“As a result, the availability of coverage would be reduced and costs for consumers would increase significantly, particularly in urban areas subject to terrorism risk and areas prone to natural disasters.”