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FOR IMMEDIATE RELEASE
LONDON - NOVEMBER 07, 2017 11:11 AM (EST)
Insurers and reinsurers with global operations are increasingly encountering market access issues as a political shift toward protectionism leads to barriers to trade in mature and emerging markets.
In a new Best’s Special Report, titled, “Rising Protectionism Creates Market Access Issues for Multinational Insurers,” A.M. Best says in the United States, pending tax reforms sought by the Trump administration have the potential to shift the competitive balance between domestic and foreign insurers. Meanwhile, the exit of the United Kingdom from the European Union will have implications for insurers using the EU financial services passporting scheme to conduct insurance business between the United Kingdom and the rest of the EU. Going against this trend, however, is the recently signed covered agreement, which seeks to even the playing field between U.S. and EU reinsurers operating in each other’s market.
Catherine Thomas, senior director, said: “In emerging markets, where international companies are seeking to capitalise on growing demand for insurance, an increasing number of countries are putting measures in place to encourage the local retention of insurance risk and restrict the involvement of foreign (re)insurers. These include: mechanisms that favour domestic companies, such as compulsory cessions and systems of right of first refusal; requirements for companies to collateralise or localise assets; and restrictions on foreign ownership and investment. Such measures can limit growth opportunities for international (re)insurers and can lead to risk concentration within domestic insurance markets.”
Yvette Essen, director, research and communications, added: “Growing regulatory and tax protectionism in mature and emerging markets is creating market access issues for international insurers. In emerging economies, potential opportunities for growth and diversification are being constrained by regulatory measures that favour domestic insurers and restrict the involvement of foreign competitors.”
A.M. Best continues to discuss with rated entities their response to market access issues. In order to navigate the associated challenges, multinational insurance groups must re-examine their corporate structures and weigh the commercial and diversification benefits of spreading risk more widely against the potential expense and capital consequences.
To access a complimentary copy of this special report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=267533 .
A.M. Best also recently published a companion report on the role of protectionism in emerging EMEA insurance markets. To view the report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=267439 .
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