The International Federation of Risk and Insurance Management Associations (IFRIMA) has called for Brazil to reconsider two legislative resolutions, which it describes as “harmful to Brazil’s interests in having a modern insurance system, taking into consideration the international reinsurance and insurance context.”
IFRIMA joins the Federation of European Risk Management Associations (FERMA) in calling for the measures to be witdrawn.
The background of the dispute centers around the reform measures the Brazilian government undertook in 2007 to update and reform its laws governing insurance. The goal was to open the market to more competition and thereby to increase the availability of coverage and lower the costs.
“Through Complementary Law 126/07, approved by the Brazilian National Parliament, the country abolished almost 70 years of reinsurance monopoly,” IFRIMA’s bulletin noted. “With the opening of the national market to other Brazilian and foreign reinsurance players, within less than three years, insurers could offer very good products to meet the needs of society and companies of all sizes.
“The result of that appropriate and necessary opening was the reshaping of the insurance sector, with companies focused on various fields of activity to offer products of high quality, substance and reliance to all buyers.”
However, the two recent resolutions, undertaken by Brazil’s CNSP (National Board of Private Insurance), which acts with powers delegated by the executive branch, are seen as undermining the previous reforms.
IFRIMA described the actions as “promoting significant changes to the texts of the Complementary Law of 2007,” and as failing to “take into consideration the international reinsurance context. Additionally, the normal legal process of changing the Complementary Law, at first, looks to have been totally ignored.”
As a result the organizations foresees the Brazilian insurance market becoming “more expensive and that consumers will pay the costs. From the worst perspective, big projects taking place in the next few years may not have enough capacity for insurance coverage.”
IFRIMA therefore issued a call to the “country’s authorities to reconsider these resolutions, which will not favor the insurance’s consumers who are the ones who will pay all the additional bills.
“We are confident that the Brazilian Federal Government will display sensibility in revoking these two resolutions, as they are harmful to Brazil’s interests in having a modern insurance system, taking into consideration the international reinsurance and insurance context.”
IFRIMA is the international umbrella organization for risk management associations, representing 25 organizations and over 40 countries around the world. It has over 10,000 individual members representing a wide range of business sectors from major industrial and commercial companies to financial institutions and local government organizations.
Source: International Federation of Risk and Insurance Management Associations
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