IN CASE YOU MISSED IT
In a recent op-ed published by the Lakeland Ledger and Winter Haven News Chief, former Congressman Dennis Ross highlights how the federal “Made in America” tax plan could further harm Florida’s property insurance market. Ross argues increasing taxes on Florida’s reliable international partners will result in a “hurricane tax” for Florida homeowners.
Part of the “Made in America” tax plan, a new “Stopping Harmful Inversions and Ending Low-Tax Developments” provision, would tax international companies between 15 and 21 percent. The new policy effort aims to incentivize companies to reinvest in America but will have unanticipated consequences in a market that relies on positive relationships with international property insurance providers.
International reinsurers are a cornerstone of the insurance market as they shift financial risk outside of the state and nation during times of catastrophe. For example, in 2017, Bermuda-based reinsurance providers paid an estimated $30 billion in damages to help communities rebuild after Hurricanes Harvey, Irma and Maria. This kind of reliable protection is critical for states like Florida that face the potential for strong storms each year.
Additionally, the tax hike would cause property insurance premiums to increase by as much as $1.62 billion, a 13.2 percent increase. “As economic development remains a high priority due to pandemic-related downturns,” Ross stresses “Florida homeowners cannot afford this unnecessary increase.”
The full op-ed is linked here and pasted below.
A ‘hurricane tax’ for Floridians? Biden’s Made in America plan puts insurance market at risk
We’ve heard this before, the federal government is here to help, and unfortunately, in this case it could just make things worse.
Under the new Made in America tax plan, internationally based businesses would face hefty tax increases through a global minimum tax. For Florida’s struggling property insurance market, which relies on international reinsurers, this policy would create a “hurricane tax” for Florida homeowners.
The new administration has decided to scrap a tax policy called the Base Erosion and Anti-Abuse Tax, which essentially lowered corporate tax cuts. Instead, the White House has introduced the Stopping Harmful Inversions and Ending Low-Tax Developments provision, where international companies would face a new tax minimum between 15% and 21%.
The administration claims these taxes will incentivize businesses to reinvest in America, which is a worthy notion. But unfortunately, Florida homeowners will end up paying more in property insurance costs because of SHILED’s grand gesture. According to R-Street Institute, a nonprofit, nonpartisan, public policy research organization, preliminary data showed the new taxes could increase Florida property insurance premiums between $639 million and $894 million, and even more research shows the increase in premiums could be as high as $1.62 billion or 13.2%. This is because the international reinsurance market is a cornerstone of Florida-based and nationally based insurers. Florida homeowners cannot afford this unnecessary increase.
Currently, 32 of the 38 top reinsurers providing coverage in Florida are internationally based companies. Citizens Property Insurance Corporation, the state-backed provider of “last resort” is also supported by international reinsurers to diversify risk should a hurricane make landfall in Florida. New reports show Citizens is increasing policyholders by 6,000 a week and is slated to top more than 760,000 policies by the end of the year. These are troubling statistics considering how many Floridians will face additional costs because of Made in America’s hurricane tax.
To make matters worse, if there were a time where Citizens could not afford to pay their claims, Florida taxpayers could be left with the costs of rebuilding our state after a natural disaster. As economic development remains a high priority due to pandemic-related downturns, Floridians should not bear the brunt of increased taxes to cover billions of dollars in damages. For example, Bermuda reinsurers were estimated to pay approximately $30 billion to cover damages resulting from Hurricane Harvey, Irma and Maria in 2017, we can’t take the risk of Florida homeowners having to cover those types of costs in the future.
As a former congressman, I am well aware of the struggles Floridians face day to day and of the complications that plague the property insurance market. As hurricanes become stronger and appear more often, our leaders should ensure our state’s homes and businesses are protected during and after catastrophe, and the Made in America tax plan will only cause further harm.
As we head into the peak of hurricane season, having our homes and businesses protected from catastrophe is top of mind. Remembering the famous quote of former President Ronald Reagan, “The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.” The new administration in Washington, D.C. should remember, sometimes as much as we try to help, our actions can hurt the ones we’re trying to protect.
Dennis Ross is a former U.S. representative from Lakeland.
Stronger Safer Florida is a nonpartisan coalition comprised of businesses, consumer and environmental groups from throughout Florida. This diverse membership seeks to protect consumers before, during, and after catastrophic events impact Florida.