Insurance Journal The Property Casualty Magazine

ABIR Targets Protectionist Policies

The Association of Bermuda Insurers & Reinsurers is warning that protectionist policies by governments on global reinsurers will ultimately backfire because of the important role global risk distribution via reinsurance plays, industry journal “Property Casualty 360″ reported yesterday [Jan.17].

Citing a recent ABIR statement on Brazil’s  protectionist reinsurance regulations, which the group said will force domestic reinsurers to pay record losses with less assistance from international reinsurance markets, the industry magazine said there are also underlying concerns about the US hinted at in the release.

ABIR is the public policy arm of Bermuda’s reinsurance sector, with offices in Hamilton and Washington DC.

“The resinsurance industry feels the Obama administration must propose its budget soon, and reinsurers are concerned that the budget might call for a tax proposed in the last few budgets, calling for a special tax  on insurance ceded by US subsidiaries of foreign insurers to their overseas units,” reported the journal.

ABIR said in 2011, more than $105 billion insured catastrophe losses were incurred from hurricane, earthquake, flood, brushfire and other natural disaster events.

About 45 percent of these insured losses will be paid by global reinsurers — nearly all of which were not located in the jurisdiction in which the event occurred.

“The timely, claims-payment record of reinsurers in spite of record setting losses is well-documented from such historical events,” said Brad Kading, ABIR president [pictured at top]. “Despite record losses, reinsurers are financially strong; and the reinsurers’ track record in paying these large claims is excellent.”

Mr. Kading listed specific examples, noting that the reinsured share of the very largest losses of 2011 — Australian flooding and windstorms, New Zealand earthquakes, Japanese earthquakes, Thai flooding — were very heavily reinsured.

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