The Obama administration proposal would raise $2.5 billion in additional revenues over 10 years, according to the Joint Tax Committee.

The Menendez/Neal bills are projected to raise $12 billion over 10 years. The bills would close the loophole by deferring deductions for reinsurance premiums paid to a foreign affiliate if the premiums are not subject to U.S. tax.

Also, in lieu of deferral, foreign-based insurers may elect to be taxed similarly to a U.S. company on the income associated with these transactions.

The legislation allows for a tax credit to offset any foreign taxes paid on such income to prevent double taxation. Thus, in either case, foreign insurers will be treated similarly to their U.S. counterparts and the legislation is consistent with tax treaty and trade obligations, according to supporters.

The Coalition for a Domestic Insurance Industry, led by W.R. Berkley, Greenwich, Conn., and Chubb, Warren, N.J., said in a statement that the bill sponsors worked with tax experts at the Treasury Department and the Joint Tax Committee in drafting the bill.

"We urge Congress to swiftly adopt the proposed legislation. Congress never intended to give a preference to foreign-controlled insurers over their domestic competitors," said William R. Berkley, chairman and CEO of W. R. Berkley Corporation, Greenwich, Conn.

"Closing unintended loopholes to recover lost revenue is one of the best ways to offset the cost of needed tax reform," he said.

But R.J. Lehmann, a senior fellow a the R Street Group, a conservative think tank, voiced concern on behalf of opponents, contending that the bill "would do serious damage to U.S. property and casualty insurance markets, while also violating international commitments made to trading partners."

He adds, "This is a protectionist measure that serves the interests of certain large domestic insurance companies by discouraging foreign-based competitors from devoting their capital to U.S. risks.

"It also is simply bad policy, in that it would tend to concentrate U.S. risks within the United States, rather than allowing the global reinsurance system to spread them throughout the globe."

Lehmann added that the proposals appear to violate the United States' commitment under the General Agreement on Trade in Services not to subject companies to more punitive or burdensome taxation based solely on where the company is based.

In addition, the United States is a party to more than 50 in-force double-tax treaties that include commitments to non-discrimination in the tax code, Lehmann contended.

Bill Newton, executive director of the Florida Consumer Action Network, said, "The legislation introduced closely mirrors thinking we have seen time and again from the Obama Administration and Congress."

Newton added, "Our concerns remain the same: instituting a tax on foreign affiliate reinsurance would only result in a more limited US domestic insurance capacity and more expensive insurance coverage, a major threat to homeowners and small businesses whether they are in Florida, Massachusetts, New Jersey or elsewhere, but particularly those in states that are historically susceptible to natural disaster."