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Puerto Rico governor submits bill to open insurance market

Bnamericas
Puerto Rico governor submits bill to open insurance market

Puerto Rico governor Ricardo Rosselló has introduced proposed legislation to grant international insurers and reinsurers greater access to the local market, as the territory looks to improve its preparedness ahead of future natural disasters.

In a statement released Sunday, public affairs secretary Ramón Rosario Cortés said the purpose of the bill was to "achieve a larger commercial opening for the purchase of reinsurance and encourage the development of a market for more affordable insurance products for all Puerto Ricans."

The law "will allow us to create the right environment to attract more and better reinsurers to do business in Puerto Rico, which will result in better insurance product options for all," said the government spokesperson, as reported in EFE.

The proposed modifications to the island's insurance code would allow local insurers to claim a credit for reinsurance on their balance sheets, which is currently permitted in US states but is not allowed in Puerto Rico, which limits the range of insurance products available to the public.

By being able to claim the credit, insurers would have greater flexibility with capital requirements, facilitating the ability to make payouts without reaching minimum liquidity levels as quickly.

The measures also include strengthening the participation of international reinsurers in the local market, incorporating the model supported by the National Association of Insurance Commissioners (NAIC).

Puerto Rico continues to grapple with recover and rebuilding efforts following hurricanes Irma and Maria last September, which also overwhelmed local insurers, who have faced sanctions for slow payouts.

The full insured losses associated with the storms remain a matter of debate, though A.M. Best recently suggested the total would eventually be between US$15bn and US$48bn, though local insurers have suggested the figure would be lower.

According to EFE, Javier Rivera Ríos, commissioner of the Puerto Rico insurance office or regulator, said that "after the losses caused by hurricanes Irma and María, we must not only guarantee a financially healthy insurance market, but also make the widest possible availability of economically accessible property insurance coverage so that citizens can obtain adequate protection against future natural events."

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