The Global Reinsurance Forum (GRF) has announced that no new major trade barriers have been added to the latest edition of its Reinsurance Trade Barriers and Market Access Issues Worldwide list, but remains concerned that significant barriers are still in place worldwide.
The GRF explained that trade barriers restrict the ability of reinsurers to freely conduct business on a cross-border basis, limiting their capacity to spread risk globally and to prevent domestic concentrations of risk.
Requirements for reinsurers operating on a cross-border basis to collateralise or localise assets, as well as restrictions on foreign ownership of subsidiaries, can also prevent the competitive spread of risk across borders, according to the GRF.
The use of discriminatory and anti-competitive mechanisms such as compulsory cessions to domestic entities, systems of ‘right of first refusal,’ and other governmental mechanisms can also be detrimental to the global reinsurance industry, the GRF said.
“Trade barriers undermine the efficiency of reinsurance markets and reduce competition, leading to reduced customer choice, higher reinsurance costs and less capacity over the long-term horizon,” said Kevin J. O’Donnell, Chairman of the GRF and President and CEO of RenaissanceRe.
“Growing protectionism is an unfortunate trend at a time when, as research shows, there remains a huge and persistent gap between the levels of economic losses experienced and insured levels worldwide.”
The GRF members are the CEOs of thirteen leading global reinsurers, which collectively represent 65% of total market gross premiums. It aims to promote a stable, innovative, and competitive reinsurance market worldwide by defining industry positions and the value of reinsurance to the economy.
