A lobbyist for the Bermuda re/insurance industry said yesterday that international regulatory standards and protectionism posed a risk to global business.

Speaking at the “Regulation as a Business Risk” conference at St John’s University in New York, Bradley Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), said the reinsurance industry was at a crossroads.

“New reinsurance capital affords policymakers with a great opportunity to prevent deficits in government insurance programmes that will saddle taxpayers with extra costs,” Mr Kading said.

“Unfortunately, badly designed international group capital standards or increased protectionist measures could destroy this opportunity and burden taxpayers with financing unnecessary government insurance programmes.

“We are at a crossroads. Capital markets are enormously interested in providing reinsurance capital. However, some governments around the world have proposed protectionist regulatory measures that dictate limits on reinsurance operations, restrict cross border trade or mandate cessions to state controlled enterprise — each of which may drive capital out of the business,” added Mr Kading, citing data from the Global Reinsurance Forum.

“Policymakers can resist the protectionist path and make markets more competitive, or take the path of ‘ring fencing’ local markets by limiting trade and dictating locally held capital. The latter will make insurance products more expensive and markets less competitive.”

ABIR represents the interests of 21 commercial insurers and reinsurers with underwriting operations in Bermuda.

Next week in Amsterdam, the International Association of Insurance Supervisors (IAIS) will hold public hearings on international capital standards which marks the next stage of consultation in development of global, group capital requirements.

“ABIR supports the development of international capital standards, but is concerned that the rapid speed of deployment and inadequate field testing will lead to insufficient, risk-sensitive, counterproductive capital requirements that will create excessive capital burdens rather than recognise the diversification benefits of intra group reinsurance support for global operations,” Mr Kading said.

Mr Kading also noted that the leadership of the Bermuda Monetary Authority (BMA) is building out leading-edge group supervision and group capital regulatory requirements which recognise the need for group capital management while meeting international standards.

Additionally, he acknowledged and supported the work being done within the European Union and the United States with regard to mutual recognition among qualified insurance supervisors.