The Association of Bermuda Insurers and Reinsurers (ABIR) has added its voice to calls for G20 leaders not to needlessly reform the insurance industry.

ABIR signed a joint letter with a number of insurance groups to UK Prime Minister and chairman of this year's Group of 20 (G20) summit Gordon Brown arguing that while regulation for banking needed substantial reform, it was not necessary to implement new regulation in the insurance sector at the same time.

The letter, which was obtained by The Royal Gazette and comes in advance of the G20 summit in London on Thursday, said that what was applicable to banks may not be appropriate and may indeed be counter-productive for insurers.

The other global life and health and property and casualty insurance groups included the Association of British Insurers, the American Council of Life Insurers, the Canadian Life and Health Insurance Association, the Dublin International Insurance & Management Association, The European Insurance and Reinsurance Federation and the Insurance Bureau of Canada.

The letter pointed out that insurance has a fundamentally different business model from banking and it was therefore important that solutions for the banking industry were not automatically applied to insurance, while the insurance groups pledged their support to governments, regulators and agencies to improve on regulation governing the financial services industry, both in and between countries.

It recommended the need for regulators to use a risk-based approach to supervision, in light of the current global economic crisis, employing a dynamic system for governing financial services providers.

In addition, the letter said that recent events had raised awareness of the hazards of not properly monitoring international groups and the risks associated with them, with the inconsistency of having a globalised insurance industry on the one hand and a 'siloed' national approach to regulation on the other needing to be reconciled.

"Insurers have structured their businesses to meet global business needs," it read. "Fragmented regulatory structures around the globe need to be overhauled to prevent regulatory protectionism, just as regulatory bodies need to cooperate, and regulatory practices need to converge.

"The undersigned associations believe a greater focus on economic risk-based regulation both from the standpoint of individual jurisdictions and on a global systemic basis should be a key public policy objective in so far as it could help to mitigate the impact of a similar financial crisis in the future while also providing additional protection to policyholders and beneficiaries," it read.

"We urge leaders to consider that regulation and prudential requirements for the insurance sector should be closely attuned to levels of risk and diversification, and provide strong incentives for sound risk management. At the same time they should also encourage healthy competition, they should not be a barrier to international trade and investment, and they should be generally supportive of the crucial role insurance companies' play in making stable long-term investments in economies around the globe."

In a separate letter, the Comité Européen des Assurances (CEA) also called on the G-20 representatives to take into account the differences between insurance and banking in examining regulatory changes.

"It is of utmost importance that solutions designed to solve problems in the banking industry are not automatically applied to insurance," Tommy Persson, president of the CEA, said in a statement.