Greater scrutiny of how companies handle the purse strings as well as increasingly stringent accounting regulations may be leading to corporations adopting a more risk averse approach to business, including possibly limiting buy-in for certain types of financial reinsurance.

This according to some leading reinsurance players speaking last week at the Hawksmere 18th annual international reinsurance congress held at the Fairmont Hamilton Hotel.

Panellists looking at the state of the current reinsurance market agreed that both structured financial products as well as traditional reinsurance were seeing demand. "Each serves a purpose," said Hannover Re board chairman Wilhelm Zeller.

But there may be more hesitation than in times past from reinsurance buyers considering alternative forms of coverage after increasing corporate governance regulations - like the Sarbanes-Oxley legislation that now must be met by US publicly traded companies - and a higher level of corporate scrutiny following a wave of high-profile scandals such as Enron and Parmelat, in recent years.

Mr. Zeller said when offering financial products, Hannover Re "counsels clients to consult with their auditor. They have to get sign off."

He added that one of the 'Big Four' accounting firms - PricewaterhouseCoopers, Ernst & Young, Deloitte and KPMG - was refusing to sign off on structured financial reinsurance programmes, but declined to name which firm was taking the hard line.

Participants, including the former CEO of St. Paul Re Inc. Mark Wigmore and president of the reinsurance arm of Quanta Capital Holdings, Rick Pagnani, agreed that one area where reinsurers have seen business fall off sharply because of boosted accounting regulations and scrutiny is corporate finite risk.

"This is where business has all but dried up," said one.

Finite risk reinsurance is a contract under which the ultimate liability of the reinsurer is capped and on which anticipated investment income is acknowledged as an underwriting component.