The Independent Consumer and Competition Commission (ICCC) has approved the proposed acquisition of shares in Pacific Re Limited (Pac Re) by Motor Vehicle Insurance Limited (MVIL).
The ICCC approval was given on August 03rd 2020.
MVIL submitted a Clearance Application to the ICCC on July 16th seeking approval to proceed with the acquisition of shares in Pac Re.
After considering all stakeholders’ comments during applications assessment, the ICCC was satisfied that the proposed share acquisition will not be likely to have the effect of substantially lessening competition in the market for reinsurance services in PNG.
The ICCC’s approval for the acquisition to proceed are based on the following:
• The barriers to entry and expansion are not significant. The recent entry of Bank South Pacific (BSP) into the insurance industry supports this view and tends to counter claims at entry would be difficult.
• There appears to be substantial opportunities for supply-side substitution by existing insurance firms into re-insurance. The ICCC has no information that suggests that insurance firms based in PNG cannot offer ‘assumed reinsurance’ products apart from their other insurance products. The only issue for the insurance firms would be having strong capital base; but this can be achieved by switching products if the demand for reinsurance increases.
• Whilst is it understood that insurance firms must seek exemption from the Office of the Insurance Commission (OIC) to reinsure outside of PNG, the fact that this option is available to them demonstrates existence of import competition.
Pacific Re provides specialty reinsurance products and programmes to assist customers manage their exposures in the sectors of busness such as Property, Engineering, Motor, Personal Accident, Workers Compensation, and Medical, among others.