Closing Foreign Insurers Tax Break a Difficult Road for US Companies

"The Coalition for a Domestic Insurance Industry" is calling on lawmakers to close a tax loophole that helps foreign insurers.

According to William R. Berkley, a member of the coalition and chairman of the W.R. Berkley Corp., foreign insurers are cutting their U.S. tax bills through reinsurance deals with affiliates in countries with lower tax rates. He said the tax on such agreements must be raised to level the playing field, or else U.S. insurers may leave the country.

Presidential hopeful Hillary Clinton supports closing up the loophole, but others are not quite convinced. Despite quietly lobbying Capitol Hill over the past year, the coalition has not succeeded in getting a bill introduced by Congress. It recently ramped up efforts, including a $1 million donation by bond insurer MBIA Inc., a coalition member.

In April, the Daily NewsFlash reported that Ms. Clinton in her proposal to help US companies compete in a global market stated that she would "eliminate the unfair advantage that foreign insurers located in tax havens have against U.S. insurers competing for U.S. business."

"The Coalition for a Domestic Insurance Industry" is a 14-member group that includes W.R. Berkley Corp, Ambac Financial Group Inc, American Financial Group Inc, Berkshire Hathaway, the Chubb Corp., EMC Insurance Companies, MBIA Inc., and Hartford Financial Services Group.

Published on May 5, 2008