[Congressional Record (Bound Edition), Volume 156 (2010), Part 9]
[Extensions of Remarks]
[Page 13259]
[From the U.S. Government Publishing Office, www.gpo.gov]




 INTRODUCTION OF THE DISTRICT OF COLUMBIA NATIONAL DISASTER INSURANCE 
                             PROTECTION ACT

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                       HON. ELEANOR HOLMES NORTON

                      of the district of columbia

                    in the house of representatives

                        Thursday, July 15, 2010

  Ms. NORTON. Madam Speaker, I rise today to introduce the District of 
Columbia National Disaster Insurance Protection Act. This bill amends 
federal law to exempt from federal income taxation catastrophic 
insurance reserves and the investment income derived from such reserves 
if held by insurance companies in the District of Columbia. Under 
current federal law, these funds are subject to federal income 
taxation, which has led property and casualty insurers to hold billions 
of dollars in reserves, either directly or indirectly through 
reinsurance, in foreign jurisdictions, such as the Cayman Islands and 
Bermuda, where they are not subject to U.S. income taxation.
  This bill serves important national purposes. This bill will help 
protect individuals and businesses with property and casualty insurance 
across the country, as well as U.S. taxpayers. Today, if a catastrophe 
occurred in the U.S. but foreign insurance companies did not pay the 
claims, U.S. taxpayers likely would be on the hook for the claims. In 
fact, after the September 11, 2001 terrorist attacks, the U.S. 
Government had to establish a federal backstop for losses related to 
terrorist attacks, the Terrorism Risk Insurance Act, which is still in 
place today. As the recent financial crisis showed, the U.S. Government 
has a strong interest in preventing systemic financial risks. 
Transparency, for example, is a major feature of the pending Wall 
Street reform bill, but there is little transparency in the 
catastrophic insurance market, posing a risk to the U.S. economy and 
taxpayers. Instead, individuals and businesses must rely on small 
foreign jurisdictions to preserve and protect catastrophic insurance 
reserves.
  I chair the subcommittee that has primary jurisdiction over 
disasters. Since 9/11, we have plugged all of the most obvious holes in 
U.S. security. There is no reason to leave the funds necessary to 
recover from disasters offshore. By locating these funds in the 
nation's capital, the most protected and secure city in the U.S., 
Congress would be shoring up an existing but overlooked security 
vulnerability.

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