Concerns that Neal Bill tax plans could be fast-tracked as part of other financial legislation.
Reinsurers in Monte Carlo have expressed fears over a “protectionist” bill in the US Congress which would see them hit by large taxes.
The measure is being pushed by US politician Richard Neal and is backed by a clutch of US-domiciled insurers and reinsurers including Berkshire Hathaway, WR Berkley, Chubb and American Financial Group who have formed a ‘Coalition for Domestic Insurance’.
The move is particularly targeted against Bermuda reinsurers who enjoy a lower-tax environment.
Michael Butt, chairman of Axis and chairman of the Association of Bermuda Insurers and Reinsurers (ABIR), said: “We have been successful in making sure that our constituency is being listened to. We have seen movement there and we are encouraged that people understand our message.
He added: “The post-crisis atmosphere always creates the risk of protectionism. We are the most global industry for the spread of risk which is that that the local and regional distribution environment should not impose cost at a customer level. It’s not just a US issue, there are manifestations elsewhere. That concerns us because our business is the ultimate distribution of risk.”
Richard Ward, CEO of Lloyd’s, said he is worried about any “protectionist moves by any country that will impact on cross border trade”.
“We have to reduce barriers to free trade and to create new ones could damage or slow the recovery.
“We have to guard against protectionism and nationalism,” he added.
Bradley Kading, president of the ABIR, said he fears the Neal Bill’s proposals to tax foreign reinsurers could be attached to a separate finance bill.
“Once there’s a revenue estimate for any tax proposals, it could be attached to another bill. It’s a fairly significant risk and a real issue.”
Kading said large individual 2009 losses had demonstrated the importance of Bermuda reinsurers. More than 70% of the $1bn cost of the Air France aircraft loss was with reinsurers in Bermuda and Europe. “This is an example of the significant risks that a lot of people don’t want to write, but Bermuda and Europe step in to write these risks.”