Too much regulation is threatening competitiveness for US-based reinsurers, according to members of the Reinsurance Association of America (RAA).

US-based reinsurers face cumbersome local regulation and restrictions on international operations, according to Transatlantic Re CEO Michael Sapnar and Reinsurance Group of America Executive VP Allan O’Bryant.

Speaking in Washington on behalf of the RAA at a House of Representatives Financial Services subcommittee hearing on international insurance competitiveness, they said US states have different laws for reinsurers, so applying for licences in multiple US jurisdictions can be a long process.

As a result, many reinsurers have established non-US companies and conduct business through a US subsidiary, Mr Sapnar said.

“We believe that a streamlined national US regulatory system will make it more attractive for reinsurers to conduct business through US operations.”

He says many countries impose barriers to reinsurers through government policies favouring local reinsurers, nationality requirements for directors, limits on foreign investment and requirements that insurers cede some risks to specified reinsurers.

The RAA says high US tax rates and a system that taxes profits generated abroad twice – domestically and in the country where they were earned – discourage investment in US companies.

Mr O’Bryant told the committee that some state-owned reinsurance companies are not subject to the same regulation as private companies.

He says free trade agreements can help US insurance companies become more competitive in international markets, provided countries enforce laws consistent with the agreement.