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Welcome to our Monthly Newsletter – October 2007

Talk Around the Bazaar

  • In Japan the banks and insurance companies are preparing themselves for the planned deregulation of bancassurance sales later this year. The world’s second largest insurance market will get even busier with the new postal life insurance company which will be privatised in October
  • Similar to China, India is planning to introduce a death and disability insurance scheme for the millions of landless households in rural areas. Also, the eligibility age for social security will be reduced from 18 to 14. Amid these developments Generali has been granted a licence to operate in the life and non-life sectors with their joint venture partner the Future Group of India. Generali Life has also been granted permission to open another branch in China
  • Besides Japan and Qatar, where AXA is continuing its dynamic product development, they are also partnering up in India to create an asset management capability with Bharti Enterprises. AXA has also recently purchased a large minority stake in Bao Minh in Vietnam
  • Throughout the Arabian Peninsula we are seeing frenzied activity. On the one hand carriers are rushing to get new products out when the opportunity arises, for example Royal & SunAlliance has just obtained a licence to provide medical insurance coverage to companies and private persons in Abu Dhabi and Al Ain. On the other hand, we see Bahrain, Qatar, Dubai and now Saudi Arabia all lining up with regional financial centres, promoting regulatory and fiscal advantages in order to attract the major players. Which way should we turn?
  • Along with planning to issue 20 pension licences to fund managers and financial institutions in China next month, the CIRC has given approval to CV Starr, Ergo and Partner Re to open representative offices in Beijing  
  • As from next year employers in Singapore will be obliged to provide medical insurance for their foreign employees
  • Gibraltar has welcomed the arrival of the English carrier Brit operating under the name of Rockhampton
  • Further eastwards in the Med, Wiener Städtische has completed the purchase of Sigma in Albania which should help this market feel more a part of Europe
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    We are currently discussing projects in the following markets and we regularly being asked to attend the annual conferences and meetings of the major networks:

  • Portugal
  • India
  • U.S.A.
  • Germany
  • Algeria
  • Turkey
  • Spain
  • Romania
  • Italy
  • Australia
  • Canada
  • Morocco
  • United Kingdom
  • Ireland
  • * * * * * * * * * *

    We have now worked with a number of networks to improve and expand their international capabilities.  If Worldwide Risk Solutions can help expand your international markets, we would be happy to listen to your needs or conduct a feasibility study. For more information, please see the contact details below.

    What Clients Say

    “Worldwide Risk Solutions saves us valuable time in planning our international strategy”

    “With their vast range of contacts, they have helped us move quickly in several directions at the same time”

    * * * * * * * * * *

    CONTACT US

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    West Sussex
    RH16 1NB, England

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    Disclaimer
    Information appearing in WoRdS is checked for technical accuracy but is not intended to provide a basis of knowledge upon which advice can be given. Worldwide Risk Solutions accepts no responsibility for any loss occasioned to any person acting or refraining from action as a result of the material included in this newsletter.

    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.
    If we can help or if you have any questions, please contact us and we can discuss how best to help you.

    In our SPOTLIGHT series we will help you understand the way different markets around the world operate so that those of you who do business there can feel more “at home abroad.” Different does not need to mean difficult but knowledge of the needs and characteristics of specific geographic markets is an advantage to those who are active in the global economy. This helps avoid misunderstandings and unfulfilled expectations. We have now done articles on Brazil, Takaful, India and more; if you would like copies, please let us know.

    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 Insurance Act 1973 (the Insurance Act) would be amended to subject DOFIs to prudential regulation;
    • Australian Prudential Regulatory Authority (APRA) www.apra.gov.au prudential framework would be explicitly modified to apply to different categories of insurer based on their risk profile; and
    • while DMFs would not be regulated at this stage, they would be required to provide data to APRA under the Financial Sector (Collection of Data) Act 2001 (FSCODA).

    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
    Worldwide Risk Solutions
    Telephone +44 (0)1444 450 919
    E-mail info@worldwiderisksolutions.com

    © Worldwide Risk Solutions LLP 2007