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9th August 2017
Insurance Europe warns on protectionist measures in Indonesia, Turkey, and Argentina-impacting European reinsurers in key markets
Insurance Europe has published updated country fact sheets for Indonesia, Turkey and Argentina. The fact sheets highlight a range of protectionist measures in place in these jurisdictions, which represent key markets for European (re)insurers.
These include protectionist measures by the Indonesian authorities that require Indonesian insurers to place all reinsurance of motor, health, personal accident, credit, life and surety business with domestic Indonesian reinsurers.
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.
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.
Insurance Europe(102 articles)