The private insurance market can shoulder more of the risk now taken on by governments — but the spread of affordable insurance is threatened by a protectionist trend.

That is the view of Brad Kading, president of the Association of Bermuda Insurers and Reinsurers, which represents 21 international insurers and reinsurers who write business out of Bermuda.

“The Florida Citizens Property Insurance Corporation has shed 56 per cent of its policies in the last four years and now stands on the precipice of paying for a one-in-100 year hurricane event without issuing any debt or forcing any Floridians to pay hurricane taxes — a huge accomplishment,” Mr Kading said in a speech at a conference in Orlando yesterday.

“Outside the state however, the US National Flood Insurance Programme (NFIP) is more than $24 billion in debt and is on an unsustainable path forward. This presents an opportunity to incentivise action to protect people and property, and to privately insure or reinsure future risk in the NFIP.

“National public/private insurance partnerships, such as the UK Flood Re programme, are model programmes that the US should follow.”

Addressing an audience including reinsurers, insurers, researchers, commercial modelling companies and regulators at the Reinsurance Association of America’s (RAA) Cat Risk Management Conference, Mr Kading added: “Outside the developed world, capital is now available to insure skyscrapers in China, expand crop insurance in India and increase the penetration of hurricane and earthquake insurance risk in Indonesia.

“With more than $60 billion in alternative capital now in the reinsurance market, and experiments under way to put this capital to work in commercial insurance, now is the time for policymakers to recognise that residual markets can be depopulated, developing markets can aggressively promote affordable insurance coverage and new products can be designed to meet 21st century technology needs.

“Impediments to this deployment are isolationist regulatory and tax measures which attempt to localise capital, limit diversification potential, impede cross border trade or penalise affiliate reinsurance transactions. We must unite to push back against this protectionist trend.”