that protection and restrictions on insurance must ultimately be removed for any jurisdiction that wants to play a major role in world trade.

Mr. Herbert N. Haag, president and CEO of leading property catastrophe reinsurer, Bermuda-based Partner Reinsurance Company Ltd., was discussing the challenges of an open insurance market in developing countries, during the UN's Conference on Trade and Development in Cairo last week.

From a podium decorated with a Bermuda flag, Mr. Haag addressed 300 delegates from 50 countries, warning that developing countries seeking to expand their insurance industries must approach the liberalisation of their laws gradually.

Mr. Haag said, "The decision to deregulate your markets should be your own.

Do not be influenced by outside pressure. Liberalisation should take place in gradual steps over a fixed period. Developing markets need time.

"They need time to mature, to increase expertise, to make the domestic insurer strong and competitive. This time of protection must clearly be limited, and companies not using this time wisely will not survive.'' He said the rules should be simple and fair for all concerned and there were advantages to harmonised regulations within the region.

He suggested regulatory controls that concentrate on solvency, but felt it should include a minimum of material control in the area of pure risk premiums.

"Insurance supervision needs, however, to become leaner and more efficient,'' he said. "On the other hand, whatever rule has been decided upon, it has to be strictly controlled and rigidly enforced. There will be no other referee around to do it effectively.'' Mr. Haag also warned, "Initial stages of liberalisation will mean great efforts and dangers for local insurers. Many offers for help will come in, be it from reinsurers or cooperation partners.

"In this delicate time you are vulnerable, therefore choose wisely so that you can rely on the help.

"This is the time to cooperate with experienced partners which will assist you in speeding up your experience process. They also will protect you if worst comes to worst. Such helping hands -- and I particularly refer to responsible reinsurers -- are committed to see you grow up healthily.

"The most vital contribution must come from you! It will be hard work and needs determination to succeed during a deregulation process. Your path may not always be straight and many obstacles have to be overcome.

"But when you follow consistently the route of professionalism you will succeed -- maybe slightly bruised and marked -- but you will succeed.'' Mr.

Haag earlier noted the difficulty in separating regulated and deregulated markets, noting that he knew of no country that had no insurance regulations.

He cited Bermuda as having the second largest number of licensed insurance companies world-wide behind the US. He saw deregulated markets as those having no price control and those that allow open market access. He saw Latin America as more advanced in terms of deregulation than East Asia.

The supervisory authorities in most Latin American countries are increasingly concentrating on monitoring the financial situation of insurers. In East Asia, on the other hand, a high regulation density continues to exist in most countries, combined with a protectionist approach in insurance supervision, protecting domestic insurers.

Mr. Haag, in his wide ranging address, also discussed the pros and cons of the deregulated market, concluding that an open insurance market had advantages that far outweighed disadvantages.