A Miami lawyer says Florida’s new offshore insurance law will help the state’s existing offshore banking and securities operations.[@@]
Earlier this month, the new state law let international insurers sell life insurance and annuities to customers outside the United States without meeting the many requirements that usually apply to domestic Florida life insurers.
Back in 1978, Florida enacted a similar law that let international banks use offices in Florida to sell banking services to customers outside the United States without complying with the laws governing Florida banks. Later, new state and federal laws let securities firms use Florida offices to sell securities to customers outside the United States without meeting the standards that apply to Florida securities firms.
The new offshore insurance law will help Florida’s offshore banking and securities offices by giving those offices the ability to package products such as mutual funds in life insurance and annuity wrappers, according to Bowman Brown, a partner at Shutts & Bowen L.L.P., Miami, who helped lobby for passage of the new law.
Firms advising wealthy offshore customers sometimes want to wrap financial services products in life insurance or annuity contracts to help the customers cut taxes or solve estate planning or business planning problems, Brown said at a recent seminar in Coral Gables, Fla., according to a written version of his remarks.
Ordinary U.S. life and annuity contracts are poor substitutes for offshore contracts, because using U.S. contracts as the wrappers subjects offshore customers to U.S. income tax withholding requirements, Brown said.
Although Florida will exempt offshore insurance operations from the rules that usually govern domestic insurance operations, the state will try to protect the interests of foreign customers by requiring offshore insurers to file financial statements with insurance regulators and by requiring the offshore insurance operations to comply with the Florida Unfair Insurance Trade Practices rules, Brown said.