Executive: IRB dismantling could be dangerous to local players

The potential dismantling of IRB-Brasil Re's reinsurance monopoly in Brazil could bring negative effects to local insurers as they would be exposed to fierce international competition, local press quoted Henrique Brandão, VP at the Brazilian private broker federation, the Fenacor, as saying. Federal reinsurance company IRB-Brasil Re has a monopoly on all reinsurance contracts in Brazil. Recently, the Brazilian finance minister Antonio Palocci said the government plans to send a bill to congress in 2005 that could pave the way for the end to the current monopoly. The federation for private insurers, the Fenaseg, celebrated Palocci's announcement and said an end to the monopoly would produce more insurance business, better rates and more jobs. However, Brandão warns that if IRB's monopoly is not dismantled very slowly and gradually local insurers are likely to be overrun by stronger international insurers. "It's the local companies that generate jobs and incomes. If the process is not done carefully many jobs could be lost," he said.