The Federation of European Risk Management Associations (FERMA) is calling upon the Brazilian government to make changes to new insurance regulations, claiming that they will threaten the ability of insurers to provide coverage for large commercial industries as well as drive up the cost of coverage. The regulations are scheduled to take effect by the end of the month, which has incited FERMA to take such an unusual step in appealing the government on behalf of its members.
The regulations to be enforced in Brazil include provisions that would prohibit insurers from making intra-group transactions. Additionally, insurance companies would not be allowed to transfer business to reinsurers. Local reinsurers will also be able to change the terms and conditions of policies without incurring penalties.
There is speculation that the proposed rules are a result of market growth over the past two years.
FERMA believes that these regulations present unnecessary obstacles for the foreign market. Companies may be disinclined to participate in the Brazilian insurance market should they be forced to be dependent on reinsurance. There will likely be an increase in administrative duties, which will have influence on premiums.
FERMA president, Peter den Dekker, states that the organization “does not believe these two regulations will benefit the Brazilian economy or the country’s image to foreign companies.” Dekker is urging the government to take this opportunity to reconsider the regulations and hopes that some middle-ground can be found.