How Life Insurers (Just Barely) Escaped a Tax Bill Catastrophe…
October 30, 2018 by Allison Bell
A year ago, life insurers were saying little about the tax bill debate in Washington, even though the tax bill drafts were all full of life insurance provisions.
Carolyn Coda — the deputy head of Americas regulatory affairs at Swiss Re — explained Monday why life insurers were so quiet: The original version of the Tax Cuts and Jobs Act (TCJA) bill would have been terrible for life insurers.
“It was quite close to being catastrophic for the insurance industry,” Coda said.
Coda told the TCJA story in New York, during a legislative and regulatory affairs session at LIMRA’s annual conference.
What went wrong?
The TCJA bill drafters wanted to cut the overall corporate tax rate to 21%, from 35%. They needed to find “pay fors” to pay for the tax cut.
The drafters thought one life insurance reserve proposal would cost life insurers about $25 billion over 10 years.