Insurance Europe has voiced its concern with protectionist measures in Indonesia, Turkey and Argentina that are stifling both domestic and international insurance and reinsurance market growth.
The organisation has released its latest fact sheets for Indonesia, Turkey, and Argentina, in light of protectionist measures and regulatory frameworks and guidelines it feels are a hindrance to the evolution of local re/insurance markets, and the ability of foreign re/insurers to operate in the regions.
In Indonesia, and from the beginning of 2016, insurers are required to place all their reinsurance business of motor, health, personal accident, credit, life, and surety business with domestic reinsurance companies, with only a few exceptions being permitted by the Otoritas Jasa Keuangan, (OJK), the country’s insurance industry regulator.
“These provisions are not only a market access barrier for European (re)insurers, but also create significantly negative consequences for the economic development of the local market, diminishing the possibility of diversifying a risk and creating high local exposure in the event of, for example, a natural disaster,” explains Insurance Europe.
Insurance Europe also warns that it remains possible that the OJK will still look to lower the foreign ownership from the current 80%, an initiative that was dropped recently. Should this be adopted it could have serious implications for foreign-owned firms, and could also see other countries across Asia-Pacific adopt a similar approach.
In Turkey, Insurance Europe has raised concerns with recent changes and proposals to the country’s regulatory guidelines for motor business and third-party liability insurance. 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,” explains Insurance Europe.
In Argentina, Insurance Europe highlights restrictions surrounding cross border reinsurance firms that operate in the country. Despite some steps being taken in the right direction around the matter, Insurance Europe feels “the pace of such change is still too slow and the measures still do not foresee the full opening of the market.”