CEA and other bodies up pressure on Argentina’s planned reinsurance rules

The groups say that the new rules will restrict cross-border reinsurance and, in their eyes will severely hinder the country’s insurance market.

The letter is in response to Resolutions 35.615 and 35.794 that will require insurance companies to place all of their reinsurance coverage within the Argentine market.

“This regulation violates the cross-border market access commitments made by Argentina within the World Trade Organisation and the G-20 and goes against international supervisory best practice,” said Michaela Koller, Director General of the CEA.

In the letter the associations set out clear arguments about why they believe the rules will severely restrict the ability of international reinsurers to provide capacity and coverage for Argentine risks and will ultimately have a negative effect on both Argentine consumers and the economy.

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“From our combined global perspectives, we believe that a robust international reinsurance market is a key driver for economic growth and financial stability. Limiting access to this market, as Resolution 35.615 would certainly do, is contrary to Argentina’s own interests,” the coalition letter states.

This follows an individual letter from the CEA sent on April 13 in which it warns that Resolution 35.615 will increase transactional costs for insurers and reinsurers, reduce insurance and reinsurance capacity in Argentina and increase risk concentration and claims volatility.

Resolution 35.615 means Argentine cedents will only be able to enter into reinsurance contracts with Argentine reinsurance firms or Argentine subsidiaries of foreign companies, with local capital of at least $5m.

According to the American Council of Life Insurers under Resolution 35.615, Argentine insurance companies will be required to ignore the basic principles of good risk management and place all of their reinsurance coverage within the limited Argentine market.