Reinsurance News

Protectionist measures hindering regional re/insurance market development: Insurance Europe

11th April 2018 - Author: Staff Writer

Insurance Europe has highlighted a number of protectionist measures throughout Argentina, Brazil, India, Indonesia, and Turkey, stating that although these countries represent a significant market for European insurers and reinsurers, existing barriers limit their ability to do business in a competitive way.

The organisation has released its latest fact sheets in light of protectionist measures and regulatory frameworks and guidelines it feels are a hindrance to the evolution of local risk transfer markets, and the ability of foreign re/insurers to operate in the regions.

Insurance Europe said it strongly believes that “the removal of trade barriers, together with addressing unjustified, often discriminatory, regulatory provisions affecting European re/insurers would help enhance trading relationships and support business in third countries.”

Although India has been considering significant changes to its regulatory framework for reinsurance, it maintains a system of order of preference in place which favours domestic reinsurers over branches of foreign reinsurers.

Meanwhile, in Brazil, positive steps were taken in 2017 to roll back restrictions on affiliates’ transactions and other barriers, however, key restrictions such as required minimum retentions by local cedants and a system of order of preference remain in place.

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Indonesia retains significant insurance and reinsurance retention limits, as well as foreign ownership limits for re/insurance companies and restrictions on cross-border data flows, although the country is in the process of negotiations with the European Union (EU) for a free trade agreement.

Insurance Europe previously raised concerns with changes and proposals to Turkey’s regulatory guidelines for motor business and third-party liability insurance, last year. This includes a premium cap that was introduced in April 2017, which, is expected to drive “significant losses for European players active in the market.

For parts of the MTPL market, the Turkish authorities also recently introduced a pooling system that – in addition to the premium caps – redistributes the underwritten risk to all market players at prescribed shares, further reducing free competition,” explained Insurance Europe.

Restrictions to global reinsurers could adversely affect economic development in local markets, lesson opportunities for risk diversification and therefore create significant local concentration risks in the event of a major loss event, such as a natural disaster.

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