NU Online News Service, May 1, 3:48 p.m.EDT

A research firm's finding that a tax increase for offshorereinsurers would be expensive for customers and limit availabilityof the coverage has the support of the Risk and InsuranceManagement Society, the group said.

The study by the Cambridge, Mass.-based Brattle Group wassponsored by the Coalition for Competitive Insurance Rates, analliance of consumers, insurers and reinsurers that includesRIMS.

Titled "TheImpact on the U.S. Insurance Market of a Tax on Offshore AffiliateReinsurance: An Economic Analysis," the report found thatlegislation to increase tax on non-U.S. reinsurers would reduce thesupply of reinsurance by 20 percent, cost insurance consumers morethan $10 billion per year and be particularly onerous fordisaster-prone states.

"The report is a clarion call to members of Congress and theadministration who might support such legislation under the guiseof protecting American insurers," said Deborah M. Luthi, member ofthe RIMS board of directors and director of enterprise riskmanagement services at Matheson.

"RIMS believes this report provides well-documented evidence ofthe detrimental impact to the global insurance market, domesticproperty and casualty insurance market, insurance consumers, andseveral states that may be prone to one or more natural disasters,"she said in a statement.

Current law allows domestic insurers to cede reinsurance totheir foreign affiliates with no penalty or cap. A discussion draftof legislation to cap the deductibility of reinsurance premiumspaid by U.S. insurers to their foreign affiliates was circulatedfor comment by U.S. Senate Finance Committee Chairman Max Baucus,D-Mont., earlier this year. RIMS said it opposes the measure aswell as a similar measure proposed in Congress last year.

The Brattle Group report was written by J. David Cummins,professor of risk management, insurance and financial institutionsat Temple University's Fox School of Business and professoremeritus of insurance and risk management at the University ofPennsylvania's Wharton School of Business, with Michael Cragg andBin Zhou, principals and senior consultants at the BrattleGroup.