Access to global reinsurance markets is crucial for catastrophe exposures, says Frank Nutter.
Reinsurance is one of the most globalised industries in the world today. Reinsurance provides a way to diversify and distribute losses globally and helps to stimulate economic growth, jobs and stability. Globalisation of reinsurance grows hand in hand with increased development in countries around the world. However, such rapid growth in developing countries leaves them vulnerable to large-scale catastrophic losses such as those seen recently in Thailand and Chile. Free and open access to global reinsurance markets is essential if these countries are to protect their long-term investments.
Despite the clear benefits and impact of global reinsurance, an increasing number of barriers to trade for reinsurers have been imposed by the relevant regulatory authorities in developing jurisdictions around the world. Africa, Argentina, Brazil, China, India and Indonesia (among others) have recently introduced regulatory measures restricting the use of global reinsurance through mechanisms such as mandatory cessions to state-owned and/or local reinsurers and restrictions on affiliate reinsurance transactions.
“An increasing number of barriers to trade for reinsurers have been imposed by the relevant regulatory authorities in developing jurisdictions around the world.”
Frank Nutter, globalisation, trade, reinsurance, opinion piece