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Asia is clearly one part of the world where mature reinsurance groups such as Hannover Re see enticing growth opportunities, as underlying economic expansion far outstrips core European and US markets.
But local regulators across the region have become increasingly defensive, insisting that reinsurers such as Hannover Re set up shop locally and placing limits on the level of premiums that can be transferred out of their territories.
This added cost of doing business, coupled with the rising levels of competition and falling prices in local markets, mean that these emerging territories do not offer the boundless opportunities once hoped for.
“There are lots of issues in this respect in Asia, for example, where protectionism is increasing, so we have to set up branches everywhere. These are non-Solvency II countries, so they are not allowing free trade, which obviously makes life more difficult for us,” explains Mr Wallin.
But it is not just emerging countries such as China, India and Indonesia that are making life more difficult for international reinsurers.
The US, the biggest and most mature insurance and reinsurance market in the world, could also see a shift towards more protectionist policies.
There is, for example, a renewed effort from the new US administration to place a tax on the export of reinsurance premiums out of the country.
The former Obama administration’s budget proposed a tax on certain reinsurance income resulting from transactions between domestic insurers and overseas-based affiliates.
As explained by the Association of Bermuda Insurers and Reinsurers, these proposals subject foreign reinsurers – but not US reinsurers – to an arbitrary test to limit the tax deductibility of certain reinsurance premiums paid to them by their US-based affiliates.
This is something that Mr Wallin, not surprisingly, thinks is simply nonsensical.
“One interesting situation is the proposed cross-border tax. This should not apply to reinsurance because if it does there will be no tax to collect because there will be no cross-border reinsurance! Economic growth, which is the main goal of the US government, is dependent upon the healthy spread of risk, so free trade in reinsurance is needed and very important. Also bear in mind that globally only 5% of the insurance premium is spent on reinsurance,” he says.
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