The Association of Bermuda Insurers and Reinsurers (ABIR) has told US and State governments that non-essential insurance programmes, such as the National Flood Insurance Program, should be moved to the private sector.
In comments delivered at the Global Insurance Symposium, ABIR president Bradley Kading called for insurance risk to be to the private sector, noting this was in the long term best interest of taxpayers and consumers.
Kading said: “With the interest of pension funds, sovereign wealth funds and hedge funds in investing in insurance markets, it’s time for policymakers to take up the challenge and put this capital to work in downsizing non-essential government insurance programmes.
“Government insurance programmes expose taxpayers to assessment, debt and cross subsidies that benefit some at the expense of others. The National Flood Insurance Program with a debt of $24 billion is a poster child of what we should all seek to avoid.
“Policymakers and regulators should systematically review government insurance programs and identify regulatory impediments to moving risk to private markets. Keep the essential programmes, but shift risk gradually as private sector interest materialises,” Kading said, noting that US and global reinsurance regulation has largely allowed reinsurance markets to attract capital.
“Policymakers and insurance regulators should act to remove red tape that keeps insurance risk in residual markets.”
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ABIR, Bermuda, North America, Bradley Kading