The use of protectionist measures in emerging countries remains a “significant barrier” to the ability of European re/insurers to place business in these regions, according to Insurance Europe.
In a recent report, the European insurance and reinsurance federation highlighted concerns about protectionist trends in a number of high growth potential markets.
For example, in Indonesia, Insurance Europe pointed to mandatory cession requirements, particularly in light of the establishment of Indonesia Re, as well as a worrying life insurance tax issue.
It claimed that local compulsory cessions diminish the possibility to diversify risk, creating high local exposure in the event of large losses, such as from natural disasters.
Similarly, in India, Insurance Europe remains concerned about discriminatory measures applied to foreign reinsurance players.
This is despite some positive changes in Indian reinsurance regulations that have amended the way in which the order of preference is applied to local cedants when placing reinsurance business.
While the new approach gives more business opportunities to European reinsurers, it still limits their ability to compete on equal terms with national reinsurers, Insurance Europe argued.
The federation also supported the progress made during recent years in addressing trade barriers in Brazil, but said that more ambition is needed to support the ability of European re/insurers to place business in Brazil on a competitive, non-discriminatory basis.
Positive measures have been taken with 2017 resolutions removing restrictions on affiliates’ transactions and modifying other limitations, but key restrictions remain in place, meaning local re/insurers are not allowed to cede more than 50% of the premiums received each year.
Finally, Insurance Europe noted that recent measures related to the reopening of the Argentinian market will likely be insufficient to ensure the full opening of the market at the planned implementation timeline.