Aviabel plans LatAm growth through partnership
For aviation insurer Aviabel, the key to success in the LatAm region is sharing its specialist expertise with local firms. Enrique Flores, Aviabel’s head of legal and claims, says this has worked to great effect in Mexico in its partnership with Patria Re and Aviabel’s plan is now to continue its expansion in the LatAm region, mainly by forging similar partnerships.
“We work jointly with local forms to provide a local service with a high technical content,” he said.
Aviabel’s growth strategy will also focus on the exploration of new products such as the insurance of remotely piloted aircraft systems (RPAS).
“We see a big interest in the region, which is part of a global trend. We are investing to keep up to date with this very fast moving line of aircraft and that’s something that we bring to the table when we partner with somebody.”
Flores predicts that Aviabel’s growth in the region will take place against a backdrop of continuing low prices and keen competition.
“Doing business in LatAm involves a large number of intermediaries so the service chain is not that straightforward,” he added.
He also expects regulatory pressures to grow in the region, particularly for reinsurers.
Another notable trend is that in the aviation niche the risk retention levels of LatAm insurers are low: they retain around 4% of the risk, less in many cases. Nowadays, however, some LatAm insurers want to retain more of the premium but at the same time they are buying more treaty capacity.
“This is a little unusual because normally in other lines you see cedants increasing the retention but not necessarily buying more reinsurance,” he said.
Looking to the future, he expects the LatAm aviation industry to expand significantly. In particular, the airline segment presents good potential, driven by increased LatAm traffic and projected growth of 6% per year in terms of passengers.
“What’s driving this is more intraregional trade but also low cost airlines,” he said. “We are seeing similar trends with aircraft manufacturers, who expect to double their sales in the next 20 years.”
However, he adds that all that growth presents the need for a lot of investment in infrastructure, and this is currently trailing behind what is needed.
One of Flores’ main interests at FIDES is to explore how to innovate in order to provide a more speedy service in the region.
“The very long service chains in LatAm make the service rather slow – and we know in particular for these risks that speed of execution is a big advantage. If you are able to innovate either from a process perspective or a business model perspective to make that faster, you have opportunities for success. This is what we have been experiencing and have been trying to push forward as a solution in general but in particular in LatAm”.
