13 November 2013

Innovation is key to success in Latin America

Innovation will be critical to success in the Latin American markets going forward and this theme will also be central to discussions at FIDES 2013, according to David Frediani, president of Ironshore International. He added that improvements in data analysis and modelling will be central to innovation in the region.

“As a specialty insurance company, Ironshore is highly-focused on leading innovative covers for the insurance industry,” Frediani said. “Key products for the Latin American market include environmental liability, casualty, high-value cargo, terrorism, and builders’ risk insurance including delay in start-up.”

Ironshore opened a Miami office in January 2013, from where, Frediani said, Ironshore offers brokers in Latin America a diversified solution for their clients’ specialty insurance needs in the region.

Some of the wider global trends prevalent in in reinsurance at the moment are also present in the Latin American markets, Frediani said, notably high levels of capacity and an increasing level of sophistication among buyers.

“The global insurance and reinsurance trends continue to be driven by high levels of capacity, relatively benign loss experience, and increased sophistication in risk management by insurance buyers, brokers and insurers, particularly in emerging markets,” he said.

“Increased regional capacity is helping support Latin American growth in infrastructure development and export-oriented economies.”

But this growing capacity is mainly affecting catastrophe business in terms of pricing, he said.

“Most of the additional capital entering the global market is geared towards short-tail natural catastrophe exposures, which continue to maintain rating pressure in that sector. We aren’t yet witnessing an expansion into specialty lines of business that are still under development in the region. The timing of Ironshore’s Miami hub and increasing awareness to brokers in the region will help us continue our growth trajectory.”

In terms of competition in the region, Frediani said it is competitive but many of the players operating there have been doing so now for directly or indirectly for many years. But though competition will be high, he stresses that innovation will be the biggest factor determining success in the region.

“Regardless of market entry or expansion plans by global reinsurers, product differentiation and innovation will continue to distinguish specialty insurance companies, such as Ironshore on our Lloyd’s syndicate managed by Pembroke Managing Agency,” he said. “Our underwriters have decades of experience underwriting risk in Latin America and continue to support the growth of our insureds and their brokers in the region.”

He believes the countries that show the most promise in terms of growth are Mexico, Chile, Colombia, Peru and Brazil driven by a number of factors.

“We see a combination of infrastructure investment moving from the planning stages to actual implementation, export-oriented markets driven by commodities, with continued fiscal reform and sustainable and growing middle classes as being the primary drivers for the next five years,” he said.

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