European countries’ efforts to increase tax revenue may erode the tax advantages life products in those countries now enjoy.

Benjamin Serra and Tobias Moerschen, analysts in the European offices of Moody’s Investors Service, New York, come to that conclusion in a new comment on the competitiveness of traditional life products in Europe.

Life insurers are worrying about the possibility of Congress changing the status of life Earthinsurance policies, annuities and related products in the United States.

In Europe, the tax advantages that life products have enjoyed over mutual funds, bank products and individual pension products are already declining, or seem likely to decline in the near future, Serra says in a statement about the comment.

“As financially-stretched governments seek to raise fiscal revenues, the decrease in tax advantages for life insurance products will likely continue,” Serra says.

European banks will be making aggressive efforts to build deposits as they prepare for the implementation of the tough new Basel III liquidity rules, and those efforts may lead banks to compete harder with life insurers for consumers’ long-term savings, the analysts say.

Tax advantages have been especially important in the life insurance markets in France, Germany and the United Kingdom, the analysts report.

In the long run, the analysts say, the tax changes may lead insurers to shift away from selling asset accumulation products.

Other European insurance market coverage from National Underwriter Life & Health: