Will proposed new Federal tax on larger insurers help smaller specialty insurers?

The answer would seem to be ‘yes,’ based on today’s article in the Wall Street Journal and especially the following observation:

“One consequence of the tax falling on the biggest insurers is that it would make them less competitive, said bank analyst Mike Moebs of Lake Bluff, Ill. “This will help smaller insurers,” he said. “It will put them in good position to compete,” particularly in specialized insurance markets.”

We are seeing more and more interest in the specialty insurance market by mid-sized and smaller carriers.  Typically, their smaller size makes it more difficult for them to compete with the biggest insurers (though this is somewhat offset by focus and by being more nimble), but having a tax advantage might help them level the playing field.  We’ll keep an eye on it.

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