The Biden “Made in America” tax plan, currently being debated in Congress, is attracting more attention of the negative variety – this time from a second Florida-based group underscoring the criticisms leveled last week by the Florida Association of Insurance Agents (FAIA) that the plan amounted to a “hurricane tax” that will raise insurance costs for homeowners.
The new group, Stronger Safer Florida, bills itself as “a nonpartisan coalition comprised of businesses, consumer and environmental groups from throughout Florida” and says its goal is “to protect consumers before, during, and after catastrophic events impact Florida.”
To that end, the group says the Biden tax plan will force international insurers and reinsurers to fo pay hefty tax increases through a new global minimum tax rate, but those insurers rely on low tax rates outside the United States to help defray costs incurred domestically. Hurricanes and typhoons hit the U.S. more than any other nation in the world with the exception of China, making the insurance market, particularly in Florida, incredibly expensive.
“The ability of US reinsurers to cede risk to Bermuda enables diversification of risk globally,” said Gerald Gakundi, Director, Insurance Supervision for the Bermuda Monetary Authority, “making the cost of buying insurance—particularly catastrophe, property and casualty insurance—more affordable to customers living in US danger zones and significantly lowering the insurance protection gap.”
According to a US Data Claims Survey by the Bermuda Monetary Authority, Bermuda-based reinsurers paid more than $400 billion in damage since 1997, resulting from large catastrophes, property and casualty losses and life insurance claims around the United States. But half of those payments – over $200 billion – were incurred in the last five years alone, highlighting the skyrocketing costs of insuring real estate along Florida’s coast.
According to the coalition’s press release, the survey’s findings “showcase the importance in diversifying risk outside of [Florida] and maintaining a healthy insurance market.”
But under the new tax plan being considered, internationally based reinsurers who’ve paid out billions to cover damages, would face hefty tax increases through Biden’s proposed “hurricane tax.” The new global minimum tax would range between 15 and 21 percent, which for Florida’s struggling property insurance market, would be a nightmare for homeowners. Data from R-Street Institute indicates the tax plan would significantly increase Florida property insurance premiums by as much as 13.2 percent, or $1.62 billion.
Stronger, Safer Florida, like the FAIA, says Internationally based reinsurers help to diversify risk outside of Florida, alleviating financial damages as the state rebuilds following a catastrophe or natural disaster. The group says this proposed “hurricane tax” could leave Floridians more vulnerable to covering natural disaster costs when a storm hits, and that lawmakers need to consider how Biden’s “Made in America” tax plan will negatively impact residents of the Sunshine State by “wrongly punishing reliable insurance partners.”