| 1 | 1 | | 82R5339 BPG-F |
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| 2 | 2 | | By: Howard of Fort Bend H.R. No. 243 |
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| 4 | 4 | | |
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| 5 | 5 | | R E S O L U T I O N |
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| 6 | 6 | | WHEREAS, The insurance business greatly depends on |
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| 7 | 7 | | affiliated reinsurance for managing and spreading risk; and |
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| 8 | 8 | | WHEREAS, Purchasing reinsurance from affiliates is a means |
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| 9 | 9 | | for large insurers to manage capital and also serves an important |
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| 10 | 10 | | risk-transfer purpose, providing significant additional primary |
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| 11 | 11 | | insurance capacity, particularly for crop, windstorm, general |
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| 12 | 12 | | liability, products liability, and aircraft insurance; and |
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| 13 | 13 | | WHEREAS, Non-U.S.-based insurance companies with U.S. |
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| 14 | 14 | | affiliates purchase reinsurance from parent and sister companies |
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| 15 | 15 | | domiciled abroad, but a bill introduced in the United States |
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| 16 | 16 | | Congress would penalize them for doing so, even though U.S. and |
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| 17 | 17 | | foreign-based insurance groups currently pay functionally |
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| 18 | 18 | | equivalent taxes on reinsurance transactions; given the average tax |
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| 19 | 19 | | burden of 25 percent in European countries, such legislation would |
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| 20 | 20 | | render most offshore reinsurance transactions prohibitively |
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| 21 | 21 | | expensive, and the U.S. market would see a capacity shortfall and |
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| 22 | 22 | | increases in premiums for consumers; and |
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| 23 | 23 | | WHEREAS, A major study by the Brattle Group, an economic |
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| 24 | 24 | | research and consulting firm, concluded that the proposed policy |
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| 25 | 25 | | would result in a 20 percent reduction in the supply of reinsurance |
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| 26 | 26 | | for consumers in the United States, in turn leading to annual cost |
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| 27 | 27 | | increases of $10 to $12 billion; in addition, a broad coalition of |
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| 28 | 28 | | industry and consumer groups have spoken out against the proposal; |
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| 29 | 29 | | and |
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| 30 | 30 | | WHEREAS, Taxation proposed in H.R. 3424, 111th Cong. (2009), |
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| 31 | 31 | | discriminates against the use of offshore affiliated reinsurance by |
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| 32 | 32 | | foreign-based companies and, if enacted, will severely undermine |
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| 33 | 33 | | the risk management practices at the heart of international |
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| 34 | 34 | | reinsurance markets; now, therefore, be it |
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| 35 | 35 | | RESOLVED, That the House of Representatives of the 82nd Texas |
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| 36 | 36 | | Legislature hereby express its opposition to H.R. 3424 and to any |
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| 37 | 37 | | other proposal that would limit the use of reinsurance by |
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| 38 | 38 | | non-U.S.-based insurance companies; and, be it further |
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| 39 | 39 | | RESOLVED, That the chief clerk of the Texas House of |
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| 40 | 40 | | Representatives forward official copies of this resolution to the |
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| 41 | 41 | | president of the United States, to the president of the Senate and |
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| 42 | 42 | | the speaker of the House of Representatives of the United States |
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| 43 | 43 | | Congress, and to all the members of the Texas delegation to Congress |
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| 44 | 44 | | with the request that this resolution be entered in the |
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| 45 | 45 | | Congressional Record as a memorial to the Congress of the United |
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| 46 | 46 | | States of America. |
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