A group of 18 international insurance associations have written to the Brazilian government to voice their concern that two reinsurance regulations recently enacted in Brazil will have a negative impact on the country's insurance market.

The letter comes after calls made by the Federation of European Risk Management Assns. and the International Federation of Risk Management Assns. Inc. for changes in Brazilian reinsurance regulations to be revoked.

The two regulations, which came into force March 31, require 40% of reinsurance business to be placed with Brazilian reinsurers and prohibit local insurers and reinsurers from ceding more than 20% of premiums to affiliated, intragroup reinsurers located abroad.

‘Departure from international standards'

“Brazil's effort to restrict insurance and reinsurance capacity is one of the most significant international issues facing the industry,” said Dave Snyder, vp and general counsel of the Washington-based American Insurance Assn., in a statement Wednesday.

“Both regulations mark a clear departure from international regulatory standards and will severely restrict the ability of international (re)insurers to provide capacity and coverage for Brazilian risks, which will ultimately have a negative effect on both the Brazilian consumer and economy,” said Michaela Koller, director general of the Brussels-based Comité Européen des Assurances, one of the signatories to the letter, in a statement.

In the letter, the 18 organizations say they believe the regulations, which were enacted by Brazil's National Private Insurance Council, would “dramatically restrict the ability of private insurers and reinsurers—both Brazilian and foreign—to do business in Brazil.”

The associations call upon the government to reassess the regulations.

18 signatories

In addition to the AIA, which represents property/casualty insurers in the United States, and the CEA, which represents insurers and reinsurers in Europe, the signatories to the letter are the American Council on Life Insurance; America’s Health Insurance Plans; the Assn. of Bermuda Insurers and Reinsurers; the Assn. of British Insurers; the Asociatión Mexicana de Instituciones de Seguros; the Brazil U.S. Business Council; the Coalition of Service Industries; the Council of Insurance Agents and Brokers; the Dublin International Insurance and Management Assn.; the European Federation of Insurance Intermediaries; the Federación Interamericana de Empresas de Seguros; the International Engineering Insurance Assn.; the International Underwriting Assn.; the General Insurance Assn. of Japan; the Property and Casualty Insurers Assn. of America; and the Reinsurance Assn. of America.