GFIA has written to the International Monetary Fund with concerns regarding the restrictions expected to be introduced under the new Ecuadorian Financial and Monetary Code. The Code grants authority to a newly created Board of Financial and Monetary Regulation to define insurance retentions limits and cessions to reinsurance.
GFIA explained that these changes will limit the ability of (re)insurers to transfer risks offshore and therefore reduce the benefits of geographic diversification, which could have adverse effects. This may include consumers having increased policy prices, as well as reducing insurers’ long-term investments in Ecuadorean industry and infrastructure.
In addition, it said that the reinsurance restrictions will result in the non-observance of several of the IAIS’ Insurance Core Principles.