Bermuda reinsurers are lining up to boost business in Florida, where regulators are lowering their hurdles to non-US reinsurers.

Yesterday Hannover Re announced that its Bermuda unit stood to gain from approval by the Sunshine State's insurance regulator, which will slash the amount of collateral it needs for doing business in the hurricane-prone state.

Florida will now require Hannover Re Bermuda Ltd. to post collateral of 20 percent of loss reserves, instead of 100 percent up to now.

Germany-based Hannover Re was the first international reinsurer to be approved for lower collateral requirements by Florida back in February, followed by the company's Bermuda unit yesterday. XL Re, the Bermuda-based reinsurance unit of XL Group plc, was also approved in June.

Other Bermuda reinsurers are in the queue to follow them. Hiscox, Ace Tempest Re, and Partner Re all have applications pending with the Florida Insurance Commission, said Brad Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR).

"ABIR members appreciate Florida Insurance Commissioner Kevin McCarty's leadership on this matter," Mr. Kading said in an e-mailed statement. "Collateral requirements are an impediment to cross-border trade. We're encouraged by the Florida action and are working with other states to advance similar proposals.

"It's a long uphill climb but some progress is being made."

Hannover Re said the change would allow the unit to write Florida business in a more capital-efficient manner.

"We welcome the decision of the Florida Office of Insurance Regulation and hope that other US states will also reduce the collateral requirements for foreign reinsurers," Hannover Re´s chief executive officer Ulrich Wallin said in a statement released yesterday.

The high collateral requirements have been a major limitation factor in the amount of reinsurance that companies based outside the US have been able to write.

Florida is so far the only US state to approve a rule imposing lower collateral requirements on non-US reinsurers that are highly rated and considered financially secure. The price of property insurance in the wind-prone, south-eastern state is a major political issue.

Florida's actions will raise hopes that other US states will follow suit.

A Hannover Re spokesman, quoted by Reuters, said: "Florida's decision has kindled discussion in other states, and there are signs they may do likewise."