HR 3424, known as the Reinsurance Tax Bill or the Neal Bill (after sponsor Richard E. Neal (D-MA)), is being debated by the U.S. House of Representatives Ways and Means Committee.   This legislation, aimed at transactions between U.S. insurers and their related foreign entities, would restrict the amount that a property & casualty insurance company may deduct for premiums paid for reinsurance.

Proponents of the legislation claim that allowing these deductions creates a “tax loophole” as those who write coverage in the U.S. are allowed to deduct the amounts they pay to reinsurers, mainly in Bermuda.  Supporters claim that closing this loophole will recapture an estimated $17 billion of revenue for the U.S. Treasury.

Detractors charge that taking away the reinsurance premium deduction is discriminatory and would raise reinsurance rates charged to U.S. companies, and ultimately require U.S. consumers to pay more for their insurance.  They claim that home insurance costs would increase $266 million for Floridians, $112 million for Texans, and $28 million for Louisiana residents.

Tell us what you think. Should this tax loophole be closed? Left open but modified? Left as it is?