Skip to Main Content
July 22, 2010
Brattle Consultants Michael Cragg and Bin Zhou Co-Author Expert Analysis Article on H.R. 3424 for Law360

Brattle principal Michael Cragg and senior consultant Bin Zhou, along with Dr. J. David Cummins, the Joseph E. Boettner Professor of Risk Management, Insurance and Financial Institutions at the Fox School of Business at Temple University and the Harry J. Loman Professor emeritus of Insurance and Risk Management at the Wharton School at the University of Pennsylvania, authored an expert analysis article on “The Impact Of HR 3424 On The US Insurance Market,” for Insurance Law360 on July 22, 2010. In the article, the authors argue that U.S. consumers would have to pay billions of dollars in higher insurance premiums if Congress passes H.R. 3424, legislation that imposes a higher tax on certain insurance companies. According to the article, affiliate reinsurance serves legitimate non-tax business purposes: it effectively mitigates the information asymmetry (adverse selection and moral hazard) between the insurers and reinsurers, and it allows risk and capital to be moved more quickly and easily within the insurance group in response to changing market conditions. The article is based on a research report, titled "The Impact on the U.S. Insurance Market of H.R. 3424 on Offshore Affiliate Reinsurance: An Updated Economic Analysis," funded by The Coalition for Competitive Insurance Rates, an opponent of H.R. 3424. The full text of the Insurance Law360 article is available by following the link below.