26 October 2015 Insurance

LatAm governments need to ease path for international reinsurers

After years of major investment in infrastructure projects, Latin America has experienced a huge decline in 2015 as a result of falling metal and oil prices. This had an impact on terms and conditions in the re/insurance industry.

To kick-start more infrastructure projects, governments could welcome private investment and make it easier for the reinsurance industry support these projects, said Ricardo García López, general manager and head of engineering, Latin America, Helvetia.

“Many infrastructure projects had to be reduced in size, postponed or cancelled, with the consequent premium write-off and revision of forecast plans by the insurance industry,” he said.

“The need to achieve the estimated budgets and obtain new markets, along with a considerable increase of available capacities, were the main reasons for the gradual deterioration of terms and conditions compared to the ones we were used to in previous years.”

Nevertheless, García López said, the current situation in Latin America still offers business opportunities for the insurance industry. Although things may progress at a different speed, governments have no option in future other than to promote national infrastructure development plans.

“Rather than fund it all themselves, they couldallow private sector investment, otherwise it is unlikely that they will be able to reduce current infrastructure deficits and improve the quality of life. We should not forget that multilateral and rating agencies predict that to close the current gap, Latin America countries should invest at an annual rate of 5 percent to 7 percent of their gross domestic product (GDP).”

In order to attract private investment, governments should commit to reforming their current legal frameworks to make them more transparent and straightforward, he added.

“This can facilitate and guarantee the necessary private investment. They also need to loosen some national restrictions to facilitate more dynamic trade.”

He said that Helvetia intends to maintain its strong presence in the region, working to understand and adapt to the changing market environment.

“As Nationale Suisse before and now, after the takeover, as Helvetia, the company is positioned in Latin America as a key player for the engineering line of business. We expect that we will be able to do the same for the other lines such as marine cargo and art, following the strategy of Helvetia in its specialty markets area.”

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