Global programmes seminar to address compliance issues

The seminar will offer an honest appraisal of what risk and insurance managers and their insurance industry partners need to do to ensure that global programmes work when called upon and that the coverage is fully compliant. With over 120 risk and insurance executives already registered the placement of global insurance programmes is clearly a hot topic currently for insurance buyers. Please email hfoster@commercialriskeurope.com today to reserve your delegate place. hideThe other bill, Resolution 225, states that insurers must place at least 40% of their reinsurance coverage with local reinsurers. Currently local reinsurers enjoy much less of an advantage, as insurers have to give them the right of first refusal for 40% of their placements. Foreign reinsurers that invested to set a foothold in the potentially large Brazilian market have cried foul, complaining that the government is changing the rules of the game after the match has already started. Insurance buyers have been unhappy too and have been lobbying actively to shoot down the new rules. Due to complex legislation in areas such as insurance and tax, Brazil is notoriously a tough country to be included in global programmes, and the regulatory uncertainty is unlikely to help change this perception. "We believe that these regulations will damage the interests of our members and the development of the insurance and reinsurance market in Brazil," commented Peter den Dekker, the president of FERMA. It will certainly reduce the ability of reinsurance buyers to find better prices and conditions for their coverages, according to local commentators. The new regulation means that at least 40% of cover will have to be placed with a maximum of seven reinsurers that enjoy the status of local reinsurers in Brazil. They are IRB itself (which has been rebranded IRB Brasil), J. Malucelli and Austral, which are both Brazilian-owned, and multinationals ACE, Mapfre, Münchener Rück and XL. But insurance buyers say that, in practice, their range of options is more limited, with only about five companies providing real capacity for large projects. The Brazilian authorities have expressed concern that the market might be unable to meet the demand for insurance and reinsurance for the many infrastructure projects that are being developed in the country. Besides updating its crooked roads, port, airport and rail networks, Brazil is building several energy plants and setting up the infrastructure required to host the 2014 Fifa World Cup and the Olympics two years later. The exploration of large offshore oil fields is also triggering huge amounts of investment. Commentators in the Brazilian media have also noted that large Brazilian banks are shareholders of IRB and have used their considerable political weight to lobby the government for extra protection for the former monopoly. Banks already own the largest insurance companies in Brazil and have a dominant position in mass-market insurance products. But IRB has been losing ground as buyers look for alternatives. In November 2009, the former monopoly owned 2.6bn reais worth of premiums, and a market share of 78%, according to Siscorp, an IT services provider. One year later, total premiums had fallen to less than 1.1bn reais, and the market share, to 56%. Foreign reinsurers with local status saw their premiums grow considerably, 40% in the case of Mapfre and 20% for XL. There was a 42% reduction in the total premiums kept with local reinsurers, which indicates that plenty of buyers decided to take their business abroad. It should not be surprising therefore that local companies have been lobbying the government for a bit of extra protection. Andres Ricardo Holownia, the president of Associação Brasileira de Gerência de Risco, ABGR, the Brazilian Risk Management Association, notes that the end of the reinsurance monopoly has begun to push insurers towards offering better products and conditions for clients with good risk management systems in place. Brazilian companies have been polishing their risk management practices as a result. "Before, with the excuse that IRB would take all the risks that they wanted to reinsure, insurers had an easy life, and they would not create new products," he says. "If the opening of the market continues, they will bring ever more products already available in other countries and adapt them to the Brazilian market."

Global programmes seminar to address compliance issues

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