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| Welcome to our Monthly Newsletter – October 2007 |
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An Established and Successful Force in International Insurance Worldwide Risk Solutions is a U.K. based commercial organisation facilitating global business strategies and business development in the international insurance industry. For more information about us, please go to www.worldwiderisksolutions.com. Since Our Last Newsletter September really has been an Indian summer and as the autumn approaches many organisations are holding their conferences. We have already been able to assist a select number of brokers with contacts in the London market. With the Rendez-vous de Septembre, Baden Baden and FERMA all taking place around now, large numbers of brokers are flocking to the continent and, wisely, many of them are adding on a few days for other visits and networking in neighbouring countries. As you will see from our website, we have a comprehensive network of broking specialists in many international markets and London, especially at the moment is buzzing with activity. With most classes of business the market is soft and there is plenty of capacity and therefore, competition. Specialist brokers, as referred to in our previous edition of WoRdS are eager for new contacts. |
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Australia Refinements to the Australian General Insurance Prudential Framework particularly as regards Direct Offshore Foreign Insurers On 3rd May 2007, the Minister for Revenue and Assistant Treasurer announced the Australian Government’s approach to the regulation of Discretionary Mutual Funds (DMFs) and Direct Offshore Foreign Insurers (DOFIs). The Minister’s announcement and its legislative amendments respond to the HIH Royal Commissioner’s Report on The Failure of HIH Insurance, released in 2003, which raised concerns regarding the lack of prudential regulation of DMFs and DOFIs. A review was commissioned by the Government to address these concerns and, in December 2005, the Treasury released a discussion paper on the subject. Submissions were received from a wide cross-section of the insurance industry and the Minister’s announcement in May 2007 has now established the Government’s policy. The announcement indicated that:
The Minister’s announcement also indicated that limited exemptions would be provided for DOFIs. The Treasury is developing options for such exemptions and will issue a separate consultation paper on this topic. The changes to the Insurance Act and FSCODA are described within the Financial Sector Legislation Amendment (Discretionary Mutual Funds and Direct Offshore Foreign Insurers) Bill 2007 (DMF & DOFI Bill), which was introduced to the Australian Parliament on 21st June 2007. Changes to the Insurance Act are expected to be passed by Parliament in the second half of 2007 and are intended to take effect on 1st July 2008. Modifications to APRA’s prudential framework will generally be effective from 1st July 2008. The changes to the Insurance Act will not change the position of foreign reinsurers which are not APRA authorised. These companies will be able to continue to accept business from APRA-authorised insurers without being required to be authorised by APRA under the Insurance Act. The prudential requirements for Lloyd’s underwriters will not change. Additionally, APRA will emphasise that the total amount of premium an insurer may cede to reinsurers is not expected to exceed 60 per cent of gross written premium. Whilst at present non-admitted insurance for non-statutory business is allowed in Australia these changes to the Regulatory system will alter this position. For example, local fronting will be a challenge depending upon the limited exemptions yet to be announced. On 20th September 2007 the Australian Treasury published an Exemption Discussion Paper, Regulation of Direct Offshore Foreign Insurers, available at this link: Exemption Discussion Paper In preparing this Spotlight article we received invaluable assistance from the leading independent risk advisers JMD Ross Insurance Brokers Pty Ltd in Sydney (www.jmdross.com.au) for which we are grateful If you would like Worldwide Risk Solutions to conduct an economic, business and insurance survey of any international markets please contact us – Details below. Worldwide Risk Solutions has a wide client base of internationally oriented organisations. Utilising the knowledge and experience gained over many years, we can put this capability at your disposal. If you would like us to conduct a swift appraisal of your global activities or if you have questions about international developments, just give us a call +44 (0)1444 450 919 or send us an e-mail and we will be happy to look at some of these questions and to start providing answers. In our next e-newsletter we will feature a Spotlight on Turkey. This market is experiencing a great deal of change and we will update you on developments in our next edition of WoRdS.See our Contact Details George Worsley, Director |
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