Thursday, 17 November 2011
Ferma fleshes out hopes for Brazilian reinsurance laws
Ferma has released concrete details of its recommendations to the Brazilian insurance regulator, Susep, that it hopes will limit the impact of two unpopular reinsurance regulations in the South American country.
Jorge Luzzi, Group Risk Management Director for Pirelli worldwide, has been elected as the next president of Ferma
As reported in Commercial Risk Europe two weeks ago, Susep opened a consultation period on regulations 225 and 232 earlier this month amongst fears in the buying community that the laws will have a negative impact on the availability and security of reinsurance in Brazil.
In its letter, Ferma said it accepts that the obligation for buyers to place 40% of their risks with Brazilian-based reinsurers, as mandated by the resolutions, will remain. But the association made clear that its members believe this should be on a prompt first refusal basis to avoid unexpected changes in terms and conditions.
Ferma argued for a five or ten day time limit for reinsurers classed as local to accept or refuse the mandatory cession before business can be placed with reinsurers in the admitted and then general reinsurer categories.
It also said that requests for further information on this mandatory cession by local reinsurers should be limited.
Please sign up here to our full-time mailing list to ensure that you receive our weekly newsletter.
Other specific measures on Ferma’s wish list include an elimination or substantial redesign of the 20% limit on risk that local and admitted reinsurers that are part of global companies can transfer to subsidiaries of the same group overseas.
These recommendations were made in a letter sent on 10 November by Ferma president Jorge Luzzi to Susep.
It said that Ferma has received many representations of concern from risk managers, especially about the possible limits on capacity and threat to insurer security posed by the limits on the spreading of risk created by the regulations.
“We thank and welcome the offer by Susep of open discussion on regulations 225 and 232. The 20 percent limit on inter-group cessions could be very risky. If reinsurance which cannot be ceded to group companies goes straight into the international market, where similar risks are placed, there will be extra costs. These are likely to be passed on to the insurance buyer and there is the possibility of losing the mutuality concept,” said Mr Luzzi.
Ferma has also urged Susep to agree that the insurer must have responsibility for claims negotiation and settlement. “The relationship must be between the insurance buyer and the insurer, no matter what reinsurers are involved in the risk,” Mr Luzzi argued.
Please sign up here to our full-time mailing list to ensure that you receive our weekly newsletter.
Cat bond market issued record $1.3bn in Q1 but upward pressure on pricing
Time to ‘end the deadlock’ on CBI says DVS commitee
Fluid capital may curtail hard market but brings risks for mutuals
Fitch expects July rate rises to be limited
Rates tumble after liberalisation but product innovation still low
Reinsurers exposed to further cat losses despite improving rates says Fitch
Canopius to acquire Omega and form partnership with Tower Group
Asian rates up at April reinsurance renewals with tougher terms for BI
Reinsurers raise rates but stay in support of Asia Pacific region
Harder times ahead-Rudi Flunger
Willis Re reports improved start to 2012 for reinsurers
Lloyd’s posts £516m loss in 2011 fueled by record £4.6bn cat claims
Fitch upgrades SCOR to 'A+' with stable outlook
Renewals bun fight delayed another year as European reinsurers report respectable 2011
A brave face in Bermuda
Reserves release of $1.3bn boosts Swiss Re profits
Fitch sees Bermuda market as ‘fundamentally resilient’
Reinsurance trade groups warn of damage caused by protectionist regulations
Reinsurers fail to impose big rate increases as capital levels hold up
Munich Re confirms 2011 costliest disaster year ever
Profitability is main challenge in emerging markets—Swiss Re
