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Florida Gov. Rick Scott has sought out U.S. Rep Vern Buchanan, R-Longboat Key, for an ally in a controversial federal battle over the reinsurance industry that could impact the Sunshine State.
Scott, according to the News Service of Florida, sent Buchanan a letter July 22 about the foreign affiliate reinsurance bill, legislation recently introduced in the House and Senate. U.S. Rep Richard Neal, D-Springfield, Mass. and Sen. Robert Menendez, D-N.J., are the bill's sponsors. The officials, in a release, say the bill will close an “unintended tax loophole that costs taxpayers billions of dollars and provides foreign-owned insurers a significant advantage over their U.S. competitors.”
The bill would ban income deductions U.S.-based insurers can receive on reinsurance premiums if the reinsurer is a foreign entity not subject to U.S. federal income tax rules. Neal, in the statement, calls the policy a flaw in tax law, and says if this bill passes it could raise $12 billion over the next decade. The Obama Administration included a similar proposal in a budget this year.
Still, despite Neal's claims, this bill and similar variations of it have failed in recent years. Opponents say the consequences of the Neal and Menendez law would lead to higher insurance rates for homeowners and business owners, among other issues. That's why Scott reached out to Buchanan, the only Florida member of the House Ways and Means Committee.
“Global reinsurance plays a significant role in Florida's insurance marketplace by providing an estimated 90% of the capacity that supports our domestic insurers and a similar amount of the capacity purchased by Citizens Property Insurance Corp.,” Scott wrote to Buchanan, according to the News Service. “Florida needs this global reinsurance capacity, and the reinsurance tax included in the president's proposal and the Neal-Menendez bill would damage our state's economic recovery by increasing insurance costs for our policyholders.”
Buchanan's press office didn't return several calls or emails for comment.
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