Insurance Europe warns over protectionism in Indonesia, Turkey, Argentina
European re/insurance federation Insurance Europe warns over a range of protectionist measures in Indonesia, Turkey and Argentina.
Protectionist measures by the Indonesian authorities require Indonesian insurers to place all reinsurance of motor, health, personal accident, credit, life and surety business with domestic Indonesian reinsurers, according to the organisation.
These provisions are not only a market access barrier for European re/insurers, but also create significantly negative consequences for the economic development of the local market, diminishing the possibility of diversifying a risk and creating high local exposure in the event of, for example, a natural disaster, according to Insurance Europe.
Recent changes and proposals for the Turkish regulatory framework for motor and third-party liability insurance (MTPL) severely threaten the ability of re/insurers to continue placing business on an economic basis and in line with appropriate business and risk management practices.
Specifically, in April 2017, the Turkish government began imposing premium caps for MTPL insurance for all types of vehicles. As the caps are set below economic costs, it is estimated that their introduction will lead to significant losses for European players active in the market.
For parts of the MTPL market, the Turkish authorities also recently introduced a pooling system that – in addition to the premium caps – redistributes the underwritten risk to all market players at prescribed shares, further reducing free competition.
Also of concern are the remaining restrictions on the activity of cross border reinsurers operating in Argentina. While positive steps have been taken towards enabling Argentinian insurers to access international reinsurance, the pace of such change is still too slow and the measures still do not foresee the full opening of the market.
Sign up to our free daily email newsletters
Today’s stories
India's GIC Re files for potential $1bn IPO
Allied World CFO and chief actuary depart post Fairfax merger
Former Sompo CEO joins UK insurtech REG
Berkshire Hathaway posts underwriting loss as AIG deal weighs on results
CEO of Towergate owner Ardonagh mulls over IPO
Travelers completes $490m M&A deal with UK insurtech Simply Business
Lloyd's syndicate Blenheim enters specialty reinsurance with Talbot hire
Markel hires political risk underwriter from Sompo Canopius
US Mutual Reinsurance Bureau CEO to retire; successor search begins
