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R E S O L U T I O N
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WHEREAS, The insurance business greatly depends on |
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affiliated reinsurance for managing and spreading risk; and |
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WHEREAS, Purchasing reinsurance from affiliates is a means |
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for large insurers to manage capital and also serves an important |
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risk-transfer purpose, providing significant additional primary |
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insurance capacity, particularly for crop, windstorm, general |
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liability, products liability, and aircraft insurance; and |
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WHEREAS, Non-U.S.-based insurance companies with U.S. |
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affiliates purchase reinsurance from parent and sister companies |
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domiciled abroad, but a bill introduced in the United States |
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Congress would penalize them for doing so, even though U.S. and |
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foreign-based insurance groups currently pay functionally |
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equivalent taxes on reinsurance transactions; given the average tax |
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burden of 25 percent in European countries, such legislation would |
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render most offshore reinsurance transactions prohibitively |
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expensive, and the U.S. market would see a capacity shortfall and |
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increases in premiums for consumers; and |
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WHEREAS, A major study by the Brattle Group, an economic |
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research and consulting firm, concluded that the proposed policy |
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would result in a 20 percent reduction in the supply of reinsurance |
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for consumers in the United States, in turn leading to annual cost |
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increases of $10 to $12 billion; in addition, a broad coalition of |
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industry and consumer groups have spoken out against the proposal; |
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and |
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WHEREAS, Taxation proposed in H.R. 3424, 111th Cong. (2009), |
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discriminates against the use of offshore affiliated reinsurance by |
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foreign-based companies and, if enacted, will severely undermine |
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the risk management practices at the heart of international |
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reinsurance markets; now, therefore, be it |
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RESOLVED, That the House of Representatives of the 82nd Texas |
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Legislature hereby express its opposition to H.R. 3424 and to any |
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other proposal that would limit the use of reinsurance by |
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non-U.S.-based insurance companies; and, be it further |
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RESOLVED, That the chief clerk of the Texas House of |
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Representatives forward official copies of this resolution to the |
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president of the United States, to the president of the Senate and |
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the speaker of the House of Representatives of the United States |
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Congress, and to all the members of the Texas delegation to Congress |
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with the request that this resolution be entered in the |
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Congressional Record as a memorial to the Congress of the United |
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States of America. |