Currency Constraints, Risk Spreading Regulation, and the Corporate Demand for Reinsurance: A National Reinsurance Market in the Spanish Autarky (1940–1959)

As a channel for risk diversification, reinsurance is essentially an international business. This global scope makes it extremely sensible to regulations on the access to international capital and foreign exchange markets. Indeed, while soft regulations during the nineteenth century allowed for the spreading of reinsurance, increasing restrictions posed during the twentieth century deeply affected the development of the industry. In the Spanish case, the international isolation of Franco dictatorship from 1940 and the implementation of an autarkic economic policy led to a strict intervention on the trade of capital and foreign currencies, which would transform the Spanish reinsurance business. Indeed, the obstacles to the access to international risk diversification services forced Spanish insurers to seek alternate mechanisms as the creation of dependent reinsurers linked to the main primary insurers. The aim of this article is to examine these strategies and their effects on the Spanish insurance market.