As appeared in the Charlotte News & Observer
June 1 marks the start of hurricane season, a date North Carolinians know well. But as meteorologists keep a watchful eye on the Atlantic Ocean this summer, my attention will be focused on Washington, D.C., where a powerful storm of legislation is brewing that would make it more difficult to obtain and afford the insurance we need to stay protected against natural disasters.
Every year our state confronts catastrophic hurricane risk, and international-based reinsurers have been there to help the state recover and rebuild. Now, two proposals that may be included in upcoming corporate tax-reform plans seek to shrink North Carolina’s insurance and reinsurance market, leaving our state’s consumers with higher costs for the same insurance coverage. One proposal, crafted by U.S. Rep. Richard Neal, D-Mass., and introduced in previous congressional and past administration budget messages, would deny tax deductions to domestic insurers for certain reinsurance premiums paid to foreign-based affiliates.
The other proposal – the border-adjusted tax featured in the Blueprint for Tax Reform by House Ways and Means Committee Chairman Kevin Brady, R-Texas, – if applied to international reinsurance, would dramatically reduce the supply and increase the price of reinsurance, upon which our state’s economy depends. All this would result in higher premiums for North Carolina residents and businesses.
Global insurers and reinsurers are the bedrock of the insurance and reinsurance market because they diversify their catastrophic risk globally, leading to lower prices and more coverage that benefits the state and national economy. Global reinsurers play an essential role in stabilizing our insurance marketplace; without them, risk concentrations would make it more difficult for domestic insurance companies to cope with an influx of claims following a disaster.
As we prepare for this year’s wave of storms, I urge North Carolina’s congressional delegation to oppose misguided and discriminatory proposals that leave our state vulnerable to higher insurance prices.
Cherrie Berry
North Carolina Commissioner of Labor