U.S. life and property casualty insurers, joined by others, are urging Brazil to stop restricting reinsurance access to only domestic reinsurers in one of the world’s leading emerging markets for insurance.
In comments filed with the SUSEP Nov.7, the Brazilian regulatory body which oversees insurance matters, the American Council of Life Insurers (ACLI), American Insurance Association (AIA), The Council of Insurance Agents & Brokers, Property Casualty Insurers Association of America, General Insurance Association of Japan Association of Bermuda Insurers and Reinsurers and the Risk and Insurance Management Society argued the country’s insurance resolutions are detrimental for Brazil and for the global insurance market. The European Insurance and Reinsurance Federation (CEA) has weighed in previously.
Market access for reinsurers offers necessary risk globalization protections, insurers argue, and Brazil’s actions are shrinking insurance and reinsurance capacity and driving up the process as well as jeopardizing recent investments.
AIA, ACLI and others are working to seek the reversal of the requirements, termed resolutions 225/10 and 232/10.
Brazil is an important long-term market for life insurers and reinsurers and they say the about-face by Brazil is a troublesome augury of their intentions.
Brad Smith, chief international officer for the ACLI, said that resolution 225 is the one that concerns cross-border provisioning of life reinsurance. It limites the ability of U.S.–and other countries’-life reinsurers to service their customers in Brazil.
“It raises costs and limits capacity,” Smith said to National Underwriter.
The new regulations require the placement of 40% of reinsurance business with local Brazilian reinsurers or domestically admitted companies and prohibit local (re)insurers from ceding more than 20% of their insurance premium to a foreign reinsurer.
Smith said it takes 18 months to two years to get admitted, on average, for life reinsurers, and said the ACLI is seeking immediate redress of the issue.