28 October 2015 Insurance

Insurance key to support countries’ economies – Lloyd’s

Increasing insurance penetration is the key to supporting Latin American economies to realise their full potential and build resilience.

That is the view of Vincent Vandendael, director of global markets for Lloyd’s.

As an example of the role that international re/insurers can play, he highlighted how Chile - a market that is open for insurers with no barriers to foreign capital - recovered quickly from the 2010 earthquake.

“That is thanks to the capital that came in from the international reinsurance community,” he said. “In contrast, Haiti, where very little insurance was sent outside the country, is still working to rebuild itself.

“A disaster like this demonstrates what international insurance can do  to support  a country. If a country makes sure from a regulatory point of view that it has a liberal insurance market, it will reap benefits.”

Latin America has been Lloyds’ fastest growing region over the past five years, with an average growth rate of 9.7 percent. This reflects growth in the region, said Vandendael, where markets such as Colombia and Mexico are growing well.

A significant driver of growth in these countries is investment in infrastructure, he added, with Colombia, Brazil and Mexico all making commitments above average investments in infrastructure over the coming five to 10 years.

“Another issue is the liberalization of the energy sector in Mexico,” he added. “We are already an important player in the energy sector but further liberalization allows us an even greater involvement in supporting the Mexican energy sector.”

Also important is the accelerating growth of the middle classes and the related appetite for new insurance opportunities.

“Some of the current legal, regulatory and social changes will accelerate the creation of a legal liability market, and that can create a whole swathe of insurance products to cover.”

Agriculture is another important growth area for Lloyds in Latin America, especially in the light of climate change.

“Here in Latin America they need food security, and insurance helps the farmers be back on their feet if something happens with their harvest,” he said. “Lloyds is an important provider of agricultural cover around the world and this is an area where governments and the industry need to work together to make sure farmers can get the benefit of insurance covers.”

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