News Focus - Lloyd's Lord Levene calls for end to trade barriers post-Katrina.

(From Reinsurance)

Barriers to trade must be removed to permit foreign reinsurers to lend more support in the event of another mega-disaster such as Hurricane Katrina, Lloyd's Chairman Lord Levene told New York business leaders.

Speaking to the Downtown Association and Insurance Brokers Association of New York, Lord Levene said that insurers faced a 'big agenda' in 2006 following last year's record hurricane season, and proceeded to set out a number of key challenges for the sector.

Emphasising the increasingly globalised nature of the insurance industry, Lord Levene said it was imperative for the US to reform its 'credit for reinsurance' rules that force foreign reinsurers to post collateral equal to 100% of their gross liabilities to US companies. He said: "The illogical demand for collateral based on zip code, not financial health, has helped drive up the costs of reinsurance and restricted critical capacity. The events of 9/11 and, more recently, Katrina only underscore the unacceptable burden and unintended consequences of these requirements. Neither effective nor efficient, the current rules distort the operation of the US insurance market, leaving US customers as the biggest losers."

Lord Levene continued: "In this century, many European reinsurers find it ...