In a recent interview with Insurance Day, the president of IRB-Brasil Re, Eduardo Nakao, reportedly commented that the reinsurance market opening has had less impact than expected, with the IRB has maintaining 90% of its business since the end of the company’s previous monopoly over the Brazilian reinsurance market in April 2008. Nakao reportedly further stated that the IRB, Brazil’s partially government owned reinsurer, maintains a significant market advantage based upon its history and experience in the market and that the company intends to compete with recent foreign entrants to the market by improving customer service and developing new and tailored solutions. It should be noted that, although the market was technically opened in April 2008, the IRB continued to benefit from a marked advantage through the end of December 2008 in that it was permitted to retrocede to any foreign reinsurer, while other participants could only retrocede to reinsurers authorized by the Brazilian regulator.
In the wake of SUSEP’s recent relaxation of the cession limit to occasional foreign reinsurers in the areas of surety and petroleum (see here), at least one local commentator is reportedly calling for further relaxation in other lines. In particular, Brazilian attorney Fabio Torres reportedly stated that the limited number of authorized local and admitted reinsurers in other lines, including aviation, mandate raising cession limits more broadly for occasional foreign reinsurers.
Foreign reinsurers also continue to struggle with indefinite tax regulations, with local lawyers providing conflicting advice on appropriate payment of taxes on reinsurance premiums under municipal and federal Brazilian law. For example, in a recent article on valoronline.com.br, reporter Laura Ignacio noted conflicting commentary of two local lawyers regarding the proper payment of municipal and federal taxes for reinsurance premiums to be transferred outside the country. Further guidance from the Brazilian tax and insurance authorities may come soon.