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18th of May 2012

News

FERMA recommends change to Brazil’s market 

Matthew Broomfield 14/11/2011

The Federation of European Risk Management Associations has recommended that Brazil limit its regulation on market capacity and security.
 
FERMA has campaigned for a relaxation of aspects of the regulations on behalf European multinationals with business interests in Brazil and in support of the Brazilian risk management association.
 
It wants SUSEP to agree that the insurer must have responsibility for claims negotiation and settlement. “The relationship must be between the insurance buyer and the insurer,” said FERMA president Jorge Luzzi.
 
FERMA also told SUSEP that it wants to see: 
 
  • Elimination or substantial redesign of the 20% limit on inter-group operations.
 
  • A five or ten day time limit for reinsurers classed as local to accept or refuse a mandatory 40% cession before business can be placed with reinsurers in the admitted or eventual reinsurer categories. 
 
  • Requests for further information on this mandatory cession to be limited to one with a further three working days from the date that it received the offer for consideration. 
 
FERMA says it has received many representations of concern from risk managers, especially about the possible limits on capacity and threat to insurer security posed by the limits on the spreading of risk created by the regulations.  
 
Luzzi said: "The 20% limit on inter-group cessions could be very risky. If reinsurance which cannot be ceded to group companies goes straight into the international market, where similar risks are placed, there will be extra costs. These are likely to be passed on to the insurance buyer and there is the possibility of losing the mutuality concept." 
 
FERMA accepts that the 40% compulsory cession to the eight local reinsurers will remain, but its members believe that this should be on a prompt first refusal basis to avoid unexpected changes in terms and conditions, Luzzi said.
 
The recommendation follows an offer from the Brazilian insurance regulator SUSEP to open discussion with critics of the regulations which went into effect earlier this year.

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Mena 11/12/2011 2:01am

I could read a book about this without finding such real-world approceahs!

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