A group of insurance trade organizations – American Council of Life Insurers (ACLI), American Insurance Association (AIA), Association of Bermuda Insurers & Reinsurers (ABIR), General Insurance Association of Japan (GIAJ), Property Casualty Insurers Association of America (PCI), Reinsurance Association of America (RAA), and The Council of Insurance Agents & Brokers – have welcomed the International Monetary Fund’s (IMF) review of Brazil’s compliance with crucial Insurance Core Principles (ICPs).
The joint bulletin focused on the IMF’s release of a report – Brazil: Detailed Assessment of Observance of Insurance Core Principles of the International Association of Insurance Supervisors – which concluded, in part, that “Brazil should improve its compliance with certain ICPs in order to promote a stable and growing insurance and reinsurance marketplace. The aforementioned organizations encourage the Brazilian government to review the IMF’s policy recommendations and move toward a system that promotes a healthier domestic financial services market.”
The Associations’ joint statement is as follows:
“Insurers, reinsurers and intermediaries from around the globe have invested significant resources in Brazil’s insurance market. We commend the IMF for its objective assessment and its recommendation for Brazil to comply with certain fundamental Insurance Core Principles as set forth by the International Association of Insurance Supervisors.
“For some time, we have been focused on Brazil’s mandatory reinsurance cessions regulations which are protectionist measures that require insurers to cede excessive levels of premium and risk to the local reinsurance market. The IMF’s report demonstrates that these mandatory regulations hinder market access, economic growth, and the healthy spread of risk. Further, open market access for reinsurers not only stands to benefit Brazil’s economy but also offers necessary risk globalization protections for its people and businesses.
“We appreciate the IMF’s recommendation that Brazil remove ‘any limits on the type of cessions that are allowed in dependence of the reinsurer’s license, and move into a supervised regime based on risk capital.’
“We hope that this report will encourage the Brazilian government to review CNSP Res. No. 232/2011 (“Prohibition of Intra-Group Transactions”) and CNSP Res. No. 225/2010 (“Change of Preferential Offer into Market Reserve”), which reversed the opening of the Brazilian reinsurance market as effectuated by legislation passed by the Brazilian Congress in 2006 (Supplementary Law No. 126/2007).
“As one of the world’s largest and fastest growing economies, Brazil’s compliance with internationally supported principles will stand to strengthen the country’s financial stability. We will work with the Brazilian government to seek outcomes that lead to greater market liberalization, the necessary dispersal of risk, and greater choice for Brazilian policyholders.”
Source: Insurance Trade Associations (as listed above)