Washington, D.C. (June 6, 2011) -- Businesses and consumers in Argentina could face higher costs and less choice for insurance coverage under a government resolution scheduled to take effect September 1, 2011, said a coalition of 12 insurance, reinsurance and business groups in South, Central and North America, Japan and Europe.

Under Resolution 35.615, Argentine insurance companies will be required to ignore the basic principles of good risk management and place all of their reinsurance coverage within the limited Argentine market. This will cause considerable harm to the Argentine economy, insurance companies and consumers.

Moreover, Resolution 35.615 contradicts the best practices regulatory principles of the International Association of Insurance Supervisors. It also violates the level-playing-field commitments made by Argentina within the World Trade Organization and the G20.

The coalition sent a letter to the Insurance Superintendent of Argentina, Francisco Durañona, outlining its objections to the resolution.

Reinsurance is often described as “insurance for insurers.” It is a vital tool used by insurance companies to spread risk, protect their financial stability and preserve their ability to pay claims even in the aftermath of a catastrophe.

The reinsurance market is global. Spreading risk globally helps maintain the solvency of local companies. By restricting global reinsurance companies, Resolution 35.794 will weaken the insurance market in Argentina. This will raise the cost of insurance and possibly lead to a dangerous concentration of risk.

“From our combined global perspectives, we believe that a robust international reinsurance market is a key driver for economic growth and financial stability. Limiting access to this market, as Resolution 35.615 would certainly do, is contrary to Argentina’s own interests,” the coalition letter says.

Download an English language copy of the coalition’s letter (PDF).

Download a Spanish language copy of the coalition’s letter (PDF).

View the CEA, the European insurance and reinsurance federation website.