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Brazil's risk management association ABGR has called for the repeal of two resolutions issued by the national insurance council CNSP that altered the relationship between insurance and reinsurance companies, insurance association CNSeg said in a press release.
According to ABGR, the two measures will impact Brazil's national interest because the first resolution adopted by CNSP prohibits insurance companies from purchasing reinsurance coverage from companies within the same financial group, while the second one forces 40% of an insurance contract's risk to be allocated to local reinsurers.
For the association, the measure will have a negative impact and contradict what the government has been doing to expand insurance coverage across the country since it opened up the reinsurance market in 2007 after 70 years of governmental monopoly. The move also goes against international trends in the reinsurance industry, the association noted.
ABGR expects the federal government to repeal the measures because in the best-case scenario, insurance premiums will go up, while in the worst-case scenario, all major public works being undertaken for the 2014 World Cup and 2016 Olympic Games will not have insurance coverage, CNSeg said.