Florida Homeowners Property Insurance Could Rise by 30 Percent Per Year
In March, Florida Taxwatch, the state’s independent, nonpartisan, nonprofit taxpayer research institute & government watchdog, released a study called The Effects of a Border-Adjusted Tax on Florida’s Property Insurance Market. The study takes a close look at what Floridians could expect if potential federal legislation that creates a border-adjusted corporate income tax is implemented. Since property insurers rely heavily on foreign reinsurance to diversify low-frequency-high-severity natural catastrophes, such as hurricanes, states most vulnerable to catastrophic losses—such as Florida—would be most impacted by applying a border-adjusted tax to reinsurance.
The proposed 20 percent border-adjusted tax would have a significant negative impact on Florida’s home insurance premiums, raising the cost of commercial and residential property insurance by $2.6 billion annually. Florida homeowners’ premiums, on average, would increase by $910 per year.
“While other countries around the world use tax schemes like the border-adjustment proposal, no developed market trading partner of the U.S. applies it to reinsurance transactions. Applying this proposed border-adjusted tax to reinsurance transactions would have a disproportionate and negative effect on Florida,” said Florida TaxWatch President and CEO Dominic M. Calabro. “Application of the tax would dramatically increase costs for insurance companies and consumers, hurt our state’s economic competitiveness, and kill tens of thousands of jobs.”
“The long-term damage to the state economy by the application of such a tax on reinsurance would put Florida behind for years,” said Stronger Safer Florida Coalition member, Associated Industries of Florida President and CEO Tom Feeney. “A decrease in earnings would propel the cost of living higher, while increased costs for hurricane-risk insurance would hamper Florida’s economic growth through declines in business investment in the state. Due to Florida’s susceptibility to major storms, it is crucial that insurance is affordable for businesses and residents.”
Read the full report here.
For more information, visit StrongerSaferFlorida.com.