American Property Casualty Insurance Association Issues Public Comment on Trade Representative Notice

WASHINGTON, Nov. 2 -- The American Property Casualty Insurance Association has issued a public comment on the Office of U.S. Trade Representative notice entitled "Request for Comments: Significant Foreign Trade Barriers for the National Trade Estimate Report". The comment was written on Oct. 26, 2021, and posted on Oct. 28, 2021:

* * *

The American Property Casualty Insurance Association (APCIA) appreciates the opportunity to submit comments identifying significant barriers to U.S. insurance exports and U.S. insurance foreign direct investment to the Office of the United States Trade Representative (USTR) to assist in the preparation of the National Trade Estimate Report on Foreign Trade Barriers (NTE).

APCIA is the primary national trade association for home, auto, and business insurers. APCIA promotes and protects the viability of private competition for the benefit of consumers and insurers, with a legacy dating back over 150 years. APCIA members represent all sizes, structures, and regions - protecting families, communities, and businesses in the U.S. and across the globe. APCIA member groups are present in over seventy countries around the world and serve customers in over one-hundred and seventy countries and territories.

All available research points clearly to the benefits for the United States from U.S. property and casualty insurance trade and investment, and the great potential for the U.S. economy and workers if other countries eliminated the significant barriers currently faced by U.S. groups abroad. For example, in its investigation Property and Casualty Insurance Services: Competitive Conditions in Foreign Markets, the U.S. International Trade Commission (USITC) concluded that U.S. exports would increase by 48 percent if all of the examined countries were to fully liberalize cross-border property and casualty insurance trade rules, and that U.S.-owned affiliates could increase sales by 28 percent if all examined countries fully liberalized affiliate sales restrictions. That liberalization, the USITC concluded, would lead to job growth here in the U.S. Those new jobs would likely pay above average wages, the USITC concluded,/i a finding that was reinforced by Professor Brad Jensen when he stated that jobs in insurance and other finance industries that are related to international trade pay, on average, more than $20,000 more per year than those jobs in the sector that are not related to international trade./ii

The immense, untapped potential of U.S. insurance trade demonstrates that U.S. insurers and reinsurers still face substantial barriers to increasing the domestic benefits from our activities in foreign markets - likely more than most other sectors. In many respects, the business of the General Agreement on Trade in Services (GATS) remains unfinished for the wide range of services industries, which is particularly true for insurers. We hope that the Administration will advocate for the U.S. insurance sector and its workers by pushing foreign governments to embrace rules that create open, competitive insurance and reinsurance markets.

While the benefits of U.S. P&C insurance trade are significant in themselves, U.S. P&C insurers and reinsurers are an essential part of promoting U.S. exports across all sectors, as well. Our members support exports in manufacturing, agricultural and services trade. U.S. exporters cannot design, test, make, grow, harvest, package, market, transport, or ship their products without insurance. In this time of supply chain stress, access to high-standard insurance such as that offered by the U.S. insurance industry is evermore important for U.S. exporters in other sectors. Finally, insurers and reinsurers contribute to global efforts to confront climate risks in the U.S. and abroad. Insurers not only underwrite risks and support economic recovery after events, but also help mitigate risks before events and significantly invest in modeling that helps our societies understand climate risks better. Our sector is an active participant in discussions in international fora on building a more climate resilient world, as well.

While this submission provides a snapshot in time of barriers faced by U.S. insurance and reinsurance groups when they seek to trade and invest abroad, there are developments on the horizon that may have global implications for U.S. groups operating abroad in the near future. Currently, the International Association of Insurance Supervisors (IAIS) is developing an international insurance capital standard (ICS). While APCIA supports cross-border collaboration between insurance supervisors, the standard under development at the IAIS is inconsistent with the U.S. system for insurance supervision and is unlikely to be adopted in the U.S. in its current form. We are concerned that the creation of a global standard that is not flexible enough to be implemented by multiple major markets such as the U.S. that currently have a high-standard supervisory approach could lead to regulatory fragmentation around the world, unintentionally creating new barriers to insurance trade.

This list of barriers to U.S. insurance trade and investment is not intended to be an exhaustive list of all barriers faced by our members, but rather a list of the most pernicious barriers, per USTR's request. This list is organized by region, and includes the following markets and blocs:

African Union, Angola, Argentina, Benin, Brazil, Burkina Faso, Cameroon, Central African Republic, Chad, Comoros, Conference Interafricaine des Marches d'Assurances (CIMA), Congo, Rep., Cote d'Ivoire, Egypt, Equatorial Guinea, Eritrea, Ethiopia, European Union, Gabon, Ghana, Guinea, Guinea-Bissau, Japan, India, Kenya, Madagascar, Malawi, Malaysia, Mali, Mauritania, Mozambique, Namibia, Niger, Nigeria, Pakistan, Philippines, Russia, Senegal, South Africa, Sri Lanka, Sudan, Switzerland, Tanzania, Togo, Turkey, the United Arab Emirates, and Zambia.

AMERICAS

* Argentina: As a general principle, insurers must reinsure Argentine risks with local reinsurers. There are, however, some exceptions:

(i) Automatic and facultative passive reinsurance operations in all their lines up to a maximum of 75% of their ceded premiums per contract. These percentages contemplate exclusively passive reinsurance operations.

(ii) The percentage may be higher in the following cases:

(a) In facultative contracts: when the limit being assumed by the reinsurer (for a policy or a pool under the same contract) is above US$ 35,000,000. The limit, in this case, arises from the analysis of the Probable Maximum Loss (accounting/actuarial analysis). This cannot include individual risks that cannot be affected in the same loss event under the PML concept.

(b)In automatic/treaty contracts: "catastrophe" or "event and catastrophe" type coverage, not proportional, and only when the limit of coverage to be borne by the reinsurer is above US$ 35,000,000.

In addition, U.S. reinsurance exports to Argentina are also affected by an intra-group limitation where retrocession between a Local Reinsurer to a related company is limited to 75% of aggregate premiums in a given fiscal year. It is important to have in mind that this limitation is a global limitation, and not a "per-treaty" limitation, and therefore the global amount ceded must be below the stated limit.

Finally, insurers carrying out active reinsurance operations for up to 10% of the total direct insurance premiums, calculated at the close of each fiscal year, are required to carry out their retrocession operations with local reinsurers.

* Brazil: Local reinsurers receive preference in cession offers. According to CNSP Resolution n. 168, the insurance company must offer preferentially to local reinsurers, at least 40% of its reinsurance cession to each automatic or facultative contract, provided the local reinsurer accepts the respective reinsurance offer in identical conditions to those offered and/or accepted by the international market.

EUROPE and MIDDLE EAST

* European Union: The July 2020 European Court of Justice (ECJ) decision invalidated the EU-U.S. Privacy Shield and called into question the use of standard contractual clauses (SCCs) used by insurers. Some European member state data protection authorities have invalidated U.S. adequacy for cross-border data transfers and use of SCCs. Those decisions could create barriers to data flows between the EU and the U.S.

* Russia: It is mandatory to offer up to 10 percent of any cession to the national reinsurer, NRC, though NRC is not obliged to accept the offer. NRC can accept a lower share or decline the offer. There is also a 50 percent cap on foreign ownership of an insurance company in Russia. Finally, Russia restricts data flows, as Federal Law No. 242-FZ requires local storage and processing of data. Irregularities in issuance of licenses also hinder access and investment.

* Switzerland: Fire and natural disaster insurance is reserved for public monopolies in 19 of 26 cantons. There are similar state roles for workers compensation insurance in certain industries. There is also a local residency requirement for managers of foreign-owned insurance company branches.

* Turkey: Turkey maintains restrictions on data flows through data localization requirements. There are restrictions on transfers of personal data out of Turkey. Information systems used by financial firms for keeping documents and records must be located within Turkey. Turkey also requires that foreign language terms must not be used in insurance contracts.

* United Arab Emirates: In the UAE, state-owned enterprises are key components of the UAE economic model and are perceived to be favored in legal disputes with foreign companies brought before the local judiciary. Furthermore, foreign equity in insurance companies is limited to 49 percent.

ASIA

* India: India's regulations give significant preferences to domestic reinsurers, including state-owned groups, over U.S. and other non-Indian reinsurers. Recent regulatory developments amended the way in which the order of preference is applied to local cedants when placing reinsurance business. While the new approach provides more business opportunities for U.S. reinsurers, it still limits their ability to compete on equal terms with Indian reinsurers. Specifically, India implemented reinsurance regulations on January 1, 2019, with the intention of maximizing retention within the country. They envisage a two-step procedure for reinsurance placements:

- Step 1: Obtaining the best terms for cessions: Indian and foreign reinsurers can offer their terms to cedants on an equal basis.

- Step 2: An offer of participation taking into account the order of preference: Every cedant must offer the best terms obtained first to Indian reinsurers and, subsequently, to foreign ones.

It should be noted that the previous law granted full right of preference to national reinsurers. The two-step approach therefore constitutes a partial reopening of the Indian market to foreign reinsurers, since they are now able to compete on the same basis as Indian reinsurers while offering their best terms. However, the approach does not provide for equal treatment of Indian and foreign players as there is still an order of preference that favors local reinsurers.

India's rules on foreign reinsurance branches may also create trade barriers. In January 2021, the Insurance Regulatory and Development Authority of India (IRDAI) launched a consultation on draft Registration and Operations of Branch Offices of Foreign Reinsurers Regulations, which contain some concerning provisions. Specifically, the draft Regulations:

- Introduce the right of first preference and cap on intragroup retrocessions o Require branches to localize all core and non-core activities in India

- Limit the integration of global infrastructure that the foreign reinsurance branches enjoy due to the global master service agreements/service agreements that their parent companies have with IT companies

- Mandate dedicated underwriters for each line of business

- Require data to be held in centers located and maintained in India

India also maintains a 74% foreign direct investment (FDI) cap on insurance companies with corresponding regulations that place more onerous regulatory requirements on foreign-controlled investors relative to domestic groups. On February 1, 2021, the Finance Minister of India presented the Union Budget for the Financial Year 2021 22 and proposed an increase in foreign investment limits for Indian insurance companies from 49% to 74%. That increase was passed by the Indian Parliament in March 2021 and is a significant, positive development. Unfortunately, subsequently the government released rules implementing the new amendments to the Insurance Law, which are less favorable for foreign insurers than for Indian insurers, including requirements for there to be resident Indian citizens in the corporate governance structure of foreign-controlled insurers and requirements that foreign-invested companies have higher solvency levels than domestic controlled companies, for no prudential purpose.

Finally, India's insurance regulator restricts data flows through stringent data localization requirements, most notably in the IRDAI (Maintenance of Insurance Records) Regulations, 2015 and the IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017. Under the IRDAI's rules, insurers are required to store all customer data and business data on servers in India and obtain express consent from the data subject to transfer data outside India.

* Japan: Level playing-field concerns persist in the insurance sector, including differential regulatory treatment of JP Group's financial institutions relative to private sector companies.

Insurance businesses run by cooperatives (kyosai) are subject to separate regulatory schemes that create a nontransparent regulatory environment, affording kyosai critical business, regulatory, and other advantages over their private sector companies.

* Malaysia: There is a tiered system of reinsurance in Malaysia that acts as a barrier to U.S. reinsurers. Bank Negara, the central bank, requires all local direct insurers to cede business first to local reinsurers (first tier) and then to Labuan- based reinsurers (second tier). Only after these two options have been exhausted may business be offered to 'offshore' or third tier reinsurers. Furthermore, (a) Malaysian Re must be offered up to 15 percent for both proportional and non-proportional treaty reinsurance (excluding aviation, energy and D&O); (b) for facultative and engineering reinsurance Malaysian Re must be offered up to 15 percent of MYR 5mn on a total sum insured basis, the PML monetary limit being MYR 1.5mn; (c) for retrocession, 20 percent must be offered by Malaysian Re to licensed direct insurers in Malaysia, for treaty and facultative business.

Malaysia also maintains a "national interest test" on the operation of financial institutions writ large, including for investments and licensing in the insurance sector, and uses that test to maintain de facto FDI caps in the insurance sector.

* Pakistan: There is a system of mandatory cessions and a right of first refusal by the state-owned Pakistan Reinsurance Co (PRCL or Pak Re) and by the local market. On treaty contracts, insurers are obliged to offer Pak Re up to 35 percent of their non-life treaty business, which it can choose to accept or not. Facultative business must be offered to Pak Re, which may accept the business or not.

The National Insurance Company, a majority state-owned enterprise, has exclusive rights to supply insurance for public sector firms, assets, and properties.

While Pakistan's legal code and economic policy do not discriminate against foreign investments, enforcement of contracts remains problematic due to a weak and inefficient judiciary.

* Philippines: There is a mandatory cession of 10 percent of all reinsurance to the Philippine National Reinsurance Company (PhilNaRe), the state-supported reinsurer.

Foreign insurers/reinsurers are also required to have unimpaired capital or assets and a reserve of not less than PHP 1 billion and must deposit, with PIC, securities satisfactory to the Insurance Commissioner. Insurance for government-funded projects is generally reserved to state-owned Government Service Insurance System (GSIS).

* Sri Lanka: There is a mandatory 30 percent cession of non-life reinsurance to a state-owned insurance and reinsurance company, the National Insurance Trust Fund (NITF). Aviation and energy risks are exempt from this rule.

AFRICA

* African Union: In AU shareholder member states, a 5 percent mandatory offer of each risk must be made to reinsurer Africa Re, a government-supported entity.

* Conference Interafricaine des Marches d'Assurances (CIMA, 14 Member States): Foreign reinsurers are excluded from writing accident, health, life and death, motor liability, land vehicles except for railway stock, goods in transit, capitalization, tontines and unit-linked insurance and there are restrictions for cessions abroad above 50 percent for all other classes of business. To reinsure more than 50 percent of a risk with unlicensed overseas reinsurers, local regulatory approval must be secured. If it is not granted, the remaining 50 percent must be reinsured locally or with a reinsurer established in another CIMA member state. Additionally, 15 percent of all treaties go to state-supported CICA-Re.

* Angola: Though regulatory approval can be sought, Angola generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/iii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./iv

* Benin: Benin generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/v a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./vi.

* Burkina Faso: Burkina Faso prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/vii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./viii

* Cameroon: Cameroon generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/ix a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./x

* Central African Republic: The Central African Republic prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xi a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xii

* Chad: Chad prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xiii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xiv

* Comoros: Comoros prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xv a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xvi

* Congo, Rep.: Congo prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xviii,/xvii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations .

* Cote d'Ivoire: Cote d'Ivoire prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xix a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xx

* Egypt: As a member country of the African Union, local insurance companies are required to cede a minimum of 5 percent of each reinsurance treaty to Africa Re.

* Equatorial Guinea: Equatorial Guinea prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxi a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xxii

* Eritrea: Eritrea generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxiii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xxiv

* Ethiopia: Ethiopia prohibits foreign investment in insurance and reinsurance companies. Furthermore, Ethiopia maintains significant reinsurance restrictions. The Manner and Criteria of Transacting Reinsurance Directive No SIB/44/2016 that came into force on 1 August 2016 imposes mandatory cession requirements for each reinsurance policy in Ethiopia. A minimum 25 percent of all treaty cessions and 5 percent of each reinsurance policy must be ceded to a local reinsurer. Additionally, the local reinsurer has the right of first refusal for all facultative placements. There is also a state monopoly or state dominance on insurance.

* Gabon: Local insurers are required to cede 15 percent of non-life premium and 5 percent of all treaty and facultative reinsurance to the state-owned reinsurer Societe Commerciale Gabonaise de Reassurance (SCG-Re).

Gabon also prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxv a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xxvi

* Ghana: Ghana generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxvii,/xxviii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations.

Foreign investments are also subject to the following minimum capital requirements: $200,000 for joint ventures with a Ghanaian partner; $500,000 for enterprises wholly-owned by a non-Ghanaian; and, $1 million for trading companies (firms that buy or sell imported goods or services) that are wholly owned by non-Ghanaian entities. The National Insurance Commission (NIC) also imposes nationality requirements with respect to board and senior management of locally incorporated reinsurance companies.

* Guinea: Guinea generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxix a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xxx

* Guinea-Bissau: Guinea-Bissau generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxxii,/xxxi a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations.

* Kenya: A minimum of one-third of the equity of an insurance company is required to be held by Kenyans or citizens of East African Community countries. Furthermore, local insurers are legally bound to offer state-owned Kenya Re 20percent of all their outward reinsurance treaties, both life and non-life. Furthermore, though regulatory approval can be sought, Kenya generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxxiii,/xxxiv a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations.

Kenya's Data Protection Act, 2019 requires that data controllers provide "proof" that personal data will be secure as a condition for storing data outside Kenya but does not describe what constitutes "proof." Additionally, the Act also requires consent of data subject as a condition for cross-border transfer of any "sensitive personal data," a broad category of information.

* Madagascar: Madagascar prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxxvi,/xxxv a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations.

* Mali: Mali prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxxvii,/xxxviii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations.

* Malawi: Cross-border reinsurance restrictions are reportedly in place. Malawi employment and immigration laws and regulations require that foreign investors prioritize hiring of nationals except in cases where skills are not locally available. The appointment of at least two Malawian residents as directors is required as well.

* Mauritania: Mauritania generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xxxix a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xl

* Mozambique: Mozambique generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xli a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xlii

* Namibia: Namibia generally prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xliii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xliv

* Niger: Niger prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xlv a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./xlvi

* Nigeria: Nigeria limits foreign investment in insurance and reinsurance companies to 40 percent of shares.

Foreign investors must register with NIPC, incorporate as a limited liability company (private or public) with Corporate Affairs Commission, procure appropriate business permits, and register with the Securities and Exchange Commission to conduct business in Nigeria.

Nigeria also restricts reinsurance access, as guidelines state that no (re)insurance risk in the Nigerian oil and gas sector may be placed overseas without written approval of the regulator. Local capacity, which is the aggregate capacity (including treaty reinsurance) of all locally registered reinsurers must be fully exhausted.

Furthermore, in addition to the 5 percent mandatory cession to Africa Re, 5 percent of treaty programs, excluding life and aviation, of member companies of the West African Insurance Companies Association must be placed with WAICA Re.

The NITDA Guidelines require all foreign and domestic businesses to store all data concerning Nigerian citizens in Nigeria

* Senegal: Local insurers face a compulsory cession of 6.5 percent of premiums plus 15 percent of treaties to the state-owned reinsurer, SEN-Re. Senegal also prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xlvii,/xlviii a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations.

* South Africa: From data collected from the Bureau of Economic Analysis, the United States has a reinsurance trade surplus of $59M with South Africa. Their direct insurance and auxiliary insurance services trade statistics are not reported. Reinsurers may not actively seek business in South Africa, except through a local subsidiary or branch.

There are also some restrictions on outward investment, such as a R1 billion (USD 83 million limit per year on outward flows per company. Larger investments must be approved by South African Reserve Bank and at least 10 percent of foreign target entities voting rights must be obtained through investment. The Protection of Investment Act of 2015 allows for international arbitration, but only after domestic remedies have been exhausted.

* Sudan: Local insurers are required to cede 50 percent of their treaty business to state-owned National Re. Local cedants must also offer all non-life facultative reinsurance to National Re, which has the option of accepting or declining on a case-by-case basis.

* Tanzania: Local insurers must give local reinsurers a mandatory preferential offer before seeking reinsurance in global markets. Tanzania also requires mandatory cessions to state-owned Tan Re (20 percent), including on the underlying policies, Africa Re (5 percent) and Zep Re (10 percent). For each overseas facultative risk approved by the supervisory authority TIRA, the insurer must pay a levy of 3 percent of the applicable gross premium (subject to a minimum of USD $200). Additionally, a payment of 20 percent of any fronting fee or reinsurance commission more than 12 percent must be paid.

Foreign reinsurance arrangements must have prior approval by the Tanzanian Insurance Regulatory Association, a minimum percentage must be placed locally, and risks must be offered locally in first instance.

The Insurance Act of 2009 requires that Tanzanian citizens hold at least 66% of the controlling interest of an insurer, whether in terms of shares, paid-up capital or voting rights. Management control thus follows the shares issued and ownership and control is thus expressly separated under the Act.

* Togo: Togo prohibits cross-border Difference-in-Conditions and Difference-in-Limits (DIC/DIL) insurance trade, which is an important type of insurance for facilitating U.S. exports by multinational enterprises by covering their unique risks. As noted in the 2021 B20 Finance & Infrastructure Policy Paper, access to DIC/DIL insurance can be a "key supporting factor to the strength and resilience of value chains",/xlix a view that was shared by the U.S. Department of Commerce's Trade Finance Advisory Council in its Second Charter Term Recommendations./l

* Zambia: Zambia's recently passed Insurance Bill of 2021 contradicts the fundamental objective of advancing the country's development and foreign investment and may require disruptive and costly adjustments by existing foreign investors to secure compliance. Although interested parties had an opportunity to comment on prior drafts, the government has rejected the private sector's critical input and kept a 49% investment cap on foreign participation in insurance sector. In addition to restrictions on foreign equity in insurance, the regulation directs the Ministry of Finance to set local reinsurance cession requirements and introduce mandatory cessions to the National Reinsurance Company. Finally, the legislation gives the Ministry significant power over the corporate governance decisions of insurers in Zambia.

View footnotes at: https://downloads.regulations.gov/USTR-2021-0016-0023/attachment_1.pdf

* * *

The notice can be viewed at: https://www.regulations.gov/document/USTR-2021-0016-0001

TARGETED NEWS SERVICE (founded 2004) features non-partisan 'edited journalism' news briefs and information for news organizations, public policy groups and individuals; as well as 'gathered' public policy information, including news releases, reports, speeches. For more information contact MYRON STRUCK, editor, [email protected], Springfield, Virginia; 703/304-1897; https://targetednews.com