The Property Casualty Insurers Association of America (PCI) has urged negotiators to make rapid progress on the Trans-Pacific Partnership (TPP) accord, “in order to give the public the benefit of open insurance markets as rapidly as possible.”
The bulletin noted that the PCI was the sole insurance industry trade association to participate as an official stakeholder in formulating the pact that “would create the biggest trade zone in U.S. history.”
David Snyder, PCI’s vice president, international policy, criticized the “unfounded claims of trade opponents,” indicating that “trade in insurance will provide significant social value and will not interfere with effective and efficient regulation.”
In his testimony on behalf of the PCI he listed four key points in support of open insurance markets and suggested that the Korea-U.S. Free Trade Agreement serve as a model for the ongoing TPP negotiations. Snyder’s four points were: 1) Open insurance markets provide significant value to society.
2) There is a vast disparity in the extent of insurance coverage in TPP countries.
3) Barriers to trade in insurance abound.
4) Insurers support appropriate regulation and international supervisory cooperation.
In demonstrating the value of open insurance markets to society, Snyder explained that loss compensation is provided through the private insurance mechanism, thereby sparing victims and governments from the burden of covered losses, freeing up their resources for other purposes. He added that insurers provide critical financial signals about risk and, more importantly, work to prevent losses and that insurers also advocate for laws and regulations providing for safer vehicles, workplaces and buildings.
“For example, in large measure due to insurance companies’ safety advocacy, U.S. highway fatalities are now down to the level they were in 1949, and the fatality rate per miles driven is at historic lows,” he stated. “It is estimated that seatbelt use alone, strongly and consistently advocated by insurers, and now mandatory, has saved 289,000 lives since 1975, according to the National Highway Traffic Safety Administration.”
Snyder also noted that insurers provided the full $40 million needed to establish the Insurance Institute for Business and Home Safety’s research and testing facility that is the centerpiece in efforts to improve building resilience and safety.
In addition Snyder pointed out that the U.S. International Trade Commission found that U.S. property and casualty insurers lose $40 billion in trade annually due to trade barriers, which include: foreign direct investment caps, limitations on foreign reinsurance, restrictions on establishment, politicized price or product supervision, unfair competition from state-owned enterprises, unnecessary restrictions on cross-border data flows and commercial insurance, and prohibitions on foreign insurers writing compulsory lines of insurance.
“All of these barriers not only harm insurers but prevent the enjoyment of the benefits of insurance in countries that erect them,” Snyder added. “We respectfully request that these negotiations result in removing or at least phasing out any such barriers to trade in insurance in any of the TPP countries. It is in everyone’s interest to do so.”
Source: Property Casualty Insurers Association of America