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SYDNEY, Australia-The Australian insurance market will not suffer a significant decrease in capacity despite the loss of 26 property/casualty insurers, which exited the market after the introduction of more stringent capital requirements earlier this month. '
Most of the insurers were minor participants in the market, said Geoff Atkins, head of nonlife insurance at Sydney, Australia-based Trowbridge Consulting, a unit of Deloitte Touche Tohmatsu.
Nevertheless, insurers and buyers have welcomed the new capital requirements, saying that the more stringent rules will make insurance companies stronger.
The General Insurance Reform Act 2001 took effect July 1.
Among other things, the law: increased minimum capital requirements to $5 million Australian from $2 million Australian (to $2.7 million from $1.1 million), with higher-risk investments requiring additional capital; requires insurers to introduce a reinsurance management strategy and a risk management strategy; and requires insurers to appoint an approved actuary.
The Sydney-based Australian Prudential Regulation Authority said that, after the introduction of the law, 10 companies entered runoff and 16 exited the market after their licenses were revoked.
ADFA Insurance Pty. Ltd., AMP General Insurance Ltd., American International Assurance Co. (Aust.) Ltd., Australian Family Assurance Ltd., Boral Insurance Pty. Ltd., Dentists' Sickness & Accident Insurance Ltd., HSB Engineering Insurance Ltd., Lionheart Insurance Pty. Ltd., PMI Indemnity Ltd. and Zurich Insurance Co. have entered runoff.
Alea Europe AG., Allianz Australia (Run off) Pty. Ltd., Commercial Alliance Lenders Mortgage Insurance Ltd., GE Capital Insurance (Australia) Pty. Ltd., Key Insurance Co Pty. Ltd., Mercantile Mutual Insurance (Workers' Compensation) Ltd., NAC Reinsurance International Ltd., NTI Ltd., RACI Pty. Ltd., Riverstone (Stockholm) Insurance Corp., Rural & General Insurance Ltd., St. Paul Fire & Marine Insurance Co., Sumitomo Marine & Fire...