Tax Cuts and Cost of Insurance Litigation
February 11, 2025 by Katharine Weber
The Tax Cuts and Jobs Act (“TCJA”), also referred to as the “Trump Tax Cuts,” reduced the corporate tax rate from 35% to 21%. This law is in the news as the country’s leadership considers whether to extend the current December 31, 2025 sunset date for key provisions of the Act and, relatedly, whether to further cut the corporate tax rate.
With the Trump Tax Cuts have come a new spin on cost of insurance (“COI”) class actions. The central theory in these recently filed class actions is that life insurance companies must pass along the benefit of increased profits derived from the TCJA tax cuts to certain of the companies’ universal life policyholders in the form of reduced COI rates. The failure to do so, according to the Susman Godfrey firm, which represents plaintiffs in these cases, amounts to a breach of the COI provisions in the defendant insurers’ universal life policies.
