Ferma - Supporting risk managers' interests in brazil


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Brazil is the B in BRIC, that group of rapidly developing economies in which European countries are taking a great interest. When the executive branch of Brazil’s National Board of Private Insurance (CNSP) unilaterally enacted two resolutions that could reduce the availability of insurance for large projects, FERMA reacted to support its members and helped get a measure of compromise.

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Ferma - Supporting risk managers' interests in brazil

  1. 1. FERMA:“Supporting riskmanagers’ interestsin Brazil”
  2. 2. The developing economies• Brazil is the “B” in BRIC; the group of rapidly developing economies in which European countries are taking a great interest BRAZIL RUSSIA BRIC CHINA INDIA
  3. 3. FERMA protecting interests Executive branch of BRAZIL’s NATIONAL BOARD of PRIVATE INSURANCE (CNSP) FERMA UNILATERALLY reacted to ENACTED support its members TWO RESOLUTIONS THAT COULD REDUCE THE AVAILABILTY OF INSURANCE FOR LARGE And helped achieve a PROJECTS measure of compromise
  4. 4. The negative impact of the regulations oninsurance• While FERMA believes there is more to be done to limit the expected negative impact.... CAPACITY COST• ....it welcomes the flexibility and understanding that the Brazilian government has so far shown in response to the worldwide concerns
  5. 5. Unusual steps• A large number of FERMA’s members’ companies have invested in Brazil• To support these members, FERMA took the unusual step of appealing to the Brazilian government to rescind the new regulations• The lobbying efforts of the national and regional risk management associations were thereby strengthened
  6. 6. National and regional risk managementassociations Asociación Asociación Latinoamerica de Brasilera de Administradores Gerencia de Riesgos y Seguros Riesgos (ABGR) (ALARYS) THE NATIONAL RISK MANAGEMENT ASSOCIATIONS
  7. 7. Some background….• In 2007, the Brazilian Parliament abolished the monopoly control of local reinsurance market by the Instituto de Reaseguros do Brasil (IRB), which dated from 1939, and phased in competition from other domestic and multinational reinsurance companies• Within two years the market had grown substantially and from January 2010, Brazilian insurers were allowed to place 60% and sometimes more of any reinsurance abroad with pre-approved reinsurers
  8. 8. The resolutions• In December 2010, the executive branch of CNSP passed two new resolutions without public consultation• These came into effect on 31 March 2011 WHAT ARE THE RESOLUTIONS?1 FORBIDS INSURERS TO CEDE BUSINESS TO AN AFFILIATED, INTRA-GROUP REINSURER2 MANDATES PLACEMENT OF 40% OF REINSURANCE BUSINESS WITH LOCAL REINSURERS
  9. 9. What do the resolutions mean?Greatly affects foreign players who have obtainedlicenses or set up local operations to writeBrazilian risks and cede them back to a groupcompany for greater capacity The first restriction has been relaxed but only allows a 20% cessionFERMA believes such obstacles to accessingforeign capacity can hinder the completion oflarge programmes which rely heavily onreinsurance, such as the vast infrastructureprojects for the 2014 FIFA World Cup and 2016Olympics in Brazil
  10. 10. A word from the Vice-President of FERMA• Jorge Luzzi, Vice-President of FERMA an Director Group Risk Management for Pirelli commented Some further modifications are under discussion with the Brazilian authorities. We continue to lobby on behalf of FERMA members, and we are available to assist with any explanations and clarifications from the insurance buyer’s viewpoint that can help reach a consensus that is reasonable for all the involved parties
  11. 11. FERMA Risk Management www.ferma-forum.eu Forum 2011 @FERMAFORUM2011 Stockholm Waterfront Congress Center “FERMA Risk Talk” 2-5 October 2011