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WASHINGTON, D.C. (August 3, 2017) – A group of U.S.-based property and casualty insurers is relaunching the effort to close a tax loophole that benefits foreign-based insurers at the expense of U.S. customers and taxpayers. The Coalition for American Insurance consists of twelve major U.S.-based insurance groups that employ hundreds of thousands of people within the United States. Coalition members provide millions of Americans with financial protection from unpredictable risks and pay substantial amount of federal, state and local taxes. The Coalition is seeking a level playing field and tax fairness for U.S.-based insurers and their consumers and employees by closing a current federal tax loophole that allows foreign-based insurers to avoid paying U.S. taxes. The Coalition has already written to lawmakers urging them to close the loophole.

“As you consider changes to the tax code, we urge you to close an existing loophole that permits foreign-based insurance companies to strip their income into tax havens and avoid paying billions of dollars in U.S. taxes,” Coalition members wrote. “This Insurance Tax Haven Loophole involves the use of affiliate reinsurance by foreign-based companies to shift much of their U.S.-generated property and casualty underwriting business and investment income outside the U.S., where is it subject to a much lower, if any, tax rate. By contrast, American-based insurers must pay current U.S. tax rates on all underwriting and investment profits from similar policies. This difference in tax treatment provides foreign-based insurers with a significant tax advantage over American insurance companies in attracting capital to write U.S. business.[1]  It is the Coalition’s position that the U.S. tax system should not favor foreign-based groups over American insurers in selling insurance here at home.”

The full Coalition membership is:

  • Alleghany Corporation
  • Allstate Insurance Company
  • American Family Mutual Insurance Company
  • American Financial Group, Inc.
  • Berkshire Hathaway
  • Cincinnati Insurance Companies
  • CNA Financial
  • EMC Insurance Companies
  • Liberty Mutual Insurance
  • The Hartford
  • The Travelers Companies, Inc.
  • W. R. Berkley Corporation, Inc.

[1] It is due to the combination of the U.S. worldwide system of taxation and specific rules under subpart F of the U.S. tax code which require U.S.-based insurance groups to pay U.S. tax on all reinsurance income, including income derived from transactions related to U.S. business as well as transactions undertaken by our foreign subsidiaries not connected to U.S. business.

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