Colletta Kemper, vice president of industry affairs for the Council of Insurance Agents and Brokers, says, "We are further troubled that the process for accessing the non-admitted market is inefficient, burdensome, could result in higher prices, worse terms and conditions for insurance buyers and capacity problems for the larger risky commercial accounts."

The two resolutions in question, CNSP Res. No. 225/10 and CNSP Res. No. 232/10, were adopted earlier this year.

 Res. No. 225 requires that 40 percent of reinsurance must be placed in the local Brazilian market.

Under Res. 232, a broker is required to first go to the local market.

Kemper says that if the local market declines, the broker can take the risk to the admitted market and then to the so-called "occasional" reinsurance market. 

She says, "If the local market accepts the risk, we're concerned that this will drive up rates and result in worse terms and conditions for the buyer if the broker is forced into a market where he can't negotiate the terms and conditions,"

Kemper says, "The process is inefficient and burdensome and would require the broker to submit proposals to all eight local reinsurers, the 28 admitted reinsurers and the 56 occasional insurers before being able to place the risk in the global reinsurance market." 

Kemper says that financial security is also an issue. "It's not clear whether a ceding company would be forced to cede to a local reinsurer with a lower financial rating than is prudent," she says.

 A number of associations filed comments with the Brazilian regulatory authority against the resolutions, including the AIA, the Council, the Property Casualty Insurers Association of America, the General Insurance Association of Japan, the Association of Bermuda Insurers and Reinsurers and the Risk and Insurance Management Society.

The American Council of Life Insurers (ACLI) has also signed on. The European Insurance and Reinsurance Federation (CEA) has weighed in previously.