Kading: Global Regulatory Standards, Protectionist Measures a Risk to Business
NEW YORK, Oct. 15, 2014 /PRNewswire/ -- In remarks delivered during the "Regulation as a Business Risk" conference at St. John's University in New York City on Oct. 15, Brad Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), the association representing the interests of 21 commercial insurers and reinsurers with underwriting operations in Bermuda, cited both international insurance regulatory standards and various protectionist measures as posing a risk to global business.
"New reinsurance capital affords policymakers with a great opportunity to prevent deficits in government insurance programs that will saddle taxpayers with extra costs. Unfortunately, badly designed international group capital standards or increased protectionist measures could destroy this opportunity and burden taxpayers with financing unnecessary government insurance programs," said Kading.
"We are at a crossroads. Capital markets are enormously interested in providing reinsurance capital. However, some governments around the world have proposed protectionist regulatory measures that dictate limits on reinsurance operations, restrict cross border trade or mandate cessions to state controlled enterprise—each of which may drive capital out of the business," said Kading, citing data from the Global Reinsurance Forum. "Policymakers can resist the protectionist path and make markets more competitive, or take the path of "ring fencing" local markets by limiting trade and dictating locally held capital. The latter will make insurance products more expensive and markets less competitive."
Next week in Amsterdam, the International Association of Insurance Supervisors (IAIS) will hold public hearings on international capital standards which marks the next stage of consultation in development of global, group capital requirements. "ABIR supports the development of international capital standards, but is concerned that the rapid speed of deployment and inadequate field testing will lead to insufficient, risk-sensitive, counterproductive capital requirements that will create excessive capital burdens rather than recognize the diversification benefits of intra group reinsurance support for global operations," Kading said.
Kading also noted that the leadership of the Bermuda Monetary Authority (BMA) is building out leading-edge group supervision and group capital regulatory requirements which recognize the need for group capital management while meeting international standards. Additionally, Kading acknowledged and supported the work being done within the European Union and the United States with regard to mutual recognition amongst qualified insurance supervisors.
About ABIR: The Association of Bermuda Insurers and Reinsurers (ABIR) represents 21 commercial insurers and reinsurers with Bermuda underwriting operations. ABIR's members at yearend 2013 wrote $70 Billion in global gross written premium on a capital and surplus base of $95 Billion. For more information: www.ABIR.bm or follow us @ABIR_Bermuda on Twitter.
Contact: Brad Kading | [email protected] | @abir_bermuda
SOURCE Association of Bermuda Insurers and Reinsurers (ABIR)
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