ABIR: Move Insurance Risk To Private Sector
In comments delivered at the Global Insurance Symposium, ABIR President Bradley Kading called for insurance risk to be moved from non-essential government insurance programs to the private sector, noting this was in the long term best interest of taxpayers and consumers.
“With the interest of pension funds, sovereign wealth funds and hedge funds in investing in insurance markets, it’s time for policymakers to take up the challenge and put this capital to work in downsizing non-essential government insurance programs,” Mr. Kading said.
“Government insurance programs expose taxpayers to assessment, debt and cross subsidies that benefit some at the expense of others. The National Flood Insurance Program with a debt of $24 billion is a poster child of what we should all seek to avoid.”
“Policymakers and regulators should systematically review government insurance programs and identify regulatory impediments to moving risk to private markets. Keep the essential programs, but shift risk gradually as private sector interest materializes,” Mr. Kading said, noting that US and global reinsurance regulation has largely allowed reinsurance markets to attract capital.
“Policymakers and insurance regulators should act to remove red tape that keeps insurance risk in residual markets,” he added.
The Association of Bermuda Insurers and Reinsurers [ABIR] represents 21 global commercial insurers and reinsurers which in 2013 collectively wrote $70 billion in global gross written premiums on a capital base of $95 billion.
