How a border tax could cut $24.6 billion in insurance sales

How a border tax could cut $24.6 billion in insurance sales

How a border tax could cut $24.6 billion in insurance sales With a system that would tax imports and with reinsurance being an international business, US insurers – whose reinsurance is mostly bought overseas – could be looking at billions of losses in insurance sales.

In an opinion piece published on The Hill, Ian Adams – associate vice president for state affairs with the R Street Institute – said the proposed border-adjustment tax would make it costlier for US life insurers to buy reinsurance. He explained that this would hurt insurers’ access to capital, making their products less affordable.

Celebrate excellence in insurance. Nominate a worthy colleague for the Insurance Business Awards.

According to a study from the R Street Institute, there would be a $59 billion rise in the lifetime costs of typical life insurance and annuity policies if effects of the border-adjustment tax are factored in. This, in turn, would lead to a potential sales loss of $24.6 billion.

Adams also cited other proposed tax changes that would make reinsurance pricier – reciprocal tax, territorial tax, and discriminatory tax.


Related stories:
Is the insurance industry on the verge of a dive?
Giant global reinsurer hit with review of credit rating