New insurance tax will cost customers billions of dollars

The Coalition for Competitive Insurance Rates (CCIR) consisting of business organizations, consumer advocacy groups, insurers and their associations. has recently provided new information which proves that the nation’s consumers will possibly pay billions of dollars in higher insurance premiums in case Congress passes legislation increasing taxes on foreign-based insurance companies.  

According to the research the HR 3424 would:  

• Cost consumers an additional $11 - $13 billion per year to maintain their current insurance coverage.  

• Significantly weaken competition and reduce reinsurance capacity in the US by 20 percent.  

• Reduce supply and increase prices disproportionately on those states most vulnerable to catastrophic losses, such as California, Florida, New York and Texas.  

• Increase home insurance costs for Floridians alone by $266 million, up from the 2009 Brattle Group analysis showing a $66 million cost increase for Florida’s consumers. 

• Raise home insurance costs in Texas by $112 million and by $28 million in Louisiana.  

• Make it more difficult for businesses to obtain insurance.  

“Adoption of such legislation would be imprudent under the best of conditions, and current conditions are anything but good. The risks due to natural catastrophes have been growing for 20 years, and that trend is likely to continue because of the development that has occurred in areas prone to earthquakes and floods,” concluded the Brattle Group researchers. “Moreover, the ability of the government and private industry to absorb shocks still remains tentative due to an uncertain economic recovery, because of a financial crisis that stems from poor risk management in the banking and mortgage industries. Thus this is an especially poor time to impose a tax that would further jeopardize our economy’s capacity to manage risk.”  

Since the release of the 2009 Brattle Group study, opposition to HR 3424 has increased -- more than 100 independent groups and individuals have written letters to Congress opposing this legislation. Trade experts, economists, consumer advocates, state insurance commissioners and business owners around the country agree that the HR 3424 is an ill advised piece of legislation.