US Congressman Richard Neal and US Senator Bob Menendez have reintroduced legislation that aims to levy more US taxes from some Bermuda reinsurance groups.The Neal bill, which was referred to the House of Representatives Committee on Ways and Means on Wednesday, would limit the ability of US subsidiaries of foreign insurance groups to claim deductions for reinsurance ceded to affiliates that are based offshore.Rep Neal, a Massachusetts Deomcrat, has been trying for three years to push through this legislation, but has failed to muster serious support so far.But with the heavily indebted US Government desperate to find new sources of revenue, observers have recognised a growing threat of legalisation punitive to the offshore reinsurance industry.Eli Lehrer, vice-president of US-based think tank the Heartland Institute, which opposes the bills, spelled out the gravity of the threat to the Island’s biggest industry.“The risk for Bermuda is greater than it has been in some time,” Mr Lehrer told The Royal Gazette.“For the first time, the bill has a Senate sponsor and, in many ways, Republican anti-tax orthodoxy seems to be crumbling. The sponsors of the bill still have a long road ahead of them and the negative consequences of the bill become clearer with each passing day.“The threat that this could pass is very real.”The legislation applies to all foreign reinsurers and does not single out Bermuda.Both the House and Senate bills met with criticism from the Coalition for Competitive Insurance Rates (CCIR), which argues that the proposals would drive up consumer insurance rates by reducing competition and critical US insurance capacity.CCIR, an organisation made up of businesses, consumer advocates, and insurance industry groups such as the Association of Bermuda Insurers and Reinsurers (ABIR), sent a letter to the chairmen and ranking members of the Senate Finance Committee and House Ways and Means Committee detailing the negative consequences of this proposal.“Consumers in states like Florida rely on a global reinsurance market to protect their homes and businesses,” said Bill Newton, executive director of the Florida Consumer Action Network. “Especially in these challenging economic times, we need to make sure that Americans can afford to conduct business and protect their families. Rep Neal’s legislation chooses to benefit a few large, profitable companies while putting average Americans at risk. Now is certainly not the time to make access to insurance more costly.”Nearly two-thirds of all reinsurance coverage required to protect US consumers and businesses is provided by non-US reinsurance companies or their affiliates. A study conducted in 2009 and updated in 2010 by researchers at the Brattle Group, a Cambridge, Massachusetts based economic consulting firm demonstrated that the proposed legislation would cost consumers more than $11 billion per year and would reduce US reinsurance capacity by 20 percent.The effects of these cost increases would be felt most in disaster-prone states like California, Florida, Louisiana and Texas.“On the heels of Hurricane Irene’s devastation in my state, anything which has the impact of driving up insurance rates and reducing reinsurance capacity for hurricane-prone states is unacceptable. Accordingly, I must raise my objection to Congressmen Neal’s legislation,” said North Carolina Insurance Commissioner Wayne Goodwin. “Ultimately, anyone in favour of consumer protection must oppose this measure.”Nancy McLernon, president and CEO of the Organisation for International Investment said: “The choice to single out foreign-based insurers and reinsurers is a particularly bad one at a time when we are looking to create jobs in the US.” said. “The bill sends an unfortunate, but clear message to global companies that they cannot count on being treated in a fair and equitable fashion when doing business here.”