IIS panel warns ring-fencing will damage emerging market potential

Members of the Global Reinsurance Leaders panel at the International Insurance Society’s 50th annual meeting in London have argued that emerging markets will suffer if regulators look to ring-fence capital and delink affiliate transactions.

“Two re/insurance CEO’s this morning noted that if insurance regulators move towards ring fencing insurance capital in specific jurisdictions that the net effect will be to deprive emerging markets of capital necessary to build out their insurance markets,” notes Brad Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers (ABIR) and moderator of the IIS Global Reinsurance Leadership panel.

“All four panel members noted that if regulators mandated capital be segregated into local jurisdictions that would lead to higher consumer prices since the benefits of diversification would be lost to the re/insurer. The outcome: reduced capacity at higher prices.”

Kading noted these public comments are a clear warning to policymakers that legislation/regulation that prevents (re)insurers from pooling their risk will have adverse consequences for the consumer. Among the regulatory restrictions that have been under discussion in various regulatory circles are: limitations on branches, segregated capital tied to local operations, limits on affiliate reinsurance and denial of cross border access tied to unrelated tax matters.

Members of the panel included: Albert Benchimol, CEO and President AXIS Capital; Denis Kessler, Chairman and CEO SCOR Group; Urs Ramseier, Chairman, Twelve Capital; and Vincent Vandendael, Director, International Markets, Lloyd’s of London. Picture of panel attached. The panel also focused on alternative capital and the impact of that on traditional markets.

“Two re/insurance CEO’s this morning noted that if insurance regulators move towards ring fencing insurance capital in specific jurisdictions that the net effect will be to deprive emerging markets of capital necessary to build out their insurance markets,” notes Brad Kading, president and executive director of the Association of Bermuda Insurers and Reinsurers (ABIR) and moderator of the IIS Global Reinsurance Leadership panel.

“All four panel members noted that if regulators mandated capital be segregated into local jurisdictions that would lead to higher consumer prices since the benefits of diversification would be lost to the re/insurer. The outcome: reduced capacity at higher prices.”

Kading noted these public comments are a clear warning to policymakers that legislation/regulation that prevents (re)insurers from pooling their risk will have adverse consequences for the consumer. Among the regulatory restrictions that have been under discussion in various regulatory circles are: limitations on branches, segregated capital tied to local operations, limits on affiliate reinsurance and denial of cross border access tied to unrelated tax matters.

Members of the panel included: Albert Benchimol, CEO and President AXIS Capital; Denis Kessler, Chairman and CEO SCOR Group; Urs Ramseier, Chairman, Twelve Capital; and Vincent Vandendael, Director, International Markets, Lloyd’s of London. Picture of panel attached. The panel also focused on alternative capital and the impact of that on traditional markets.