LatAm spurs competition from new players

The attractiveness of Latin America has led to the arrival of new markets willing to undercut price to capture market share, says Luis Sonville, managing director of Talbot LatAm.

“Increased capacity puts further pressure on rates and market conditions. Additional challenges are presented by the significant devaluations in local currencies such as the Mexican, Colombian, and Chilean pesos and most significantly the Brazilian real,” he said.

In spite of the economic slowdown in the region, LatAm continues to be an attractive emerging market with economic development opportunities in countries including Mexico, Colombia, Peru, and Chile, he said. The region’s growing middle classes and higher income levels are leading to further development in small and medium enterprises (SMEs).

“The developing SME sector and growing middle classes trigger insurance opportunities that were historically not evident in the region. The region continues to require major investment in infrastructure and energy projects which will have a demand for insurance coverage across several classes.”

While LatAm countries have for the most part implemented tight regulatory control, issues of inconsistency, lack of efficient regulation, and the unpredictability of regulatory changes in less mature markets make compliance a time-consuming challenge for markets operating in the region, he added.

“In regards to political instability, this comes with the region’s DNA. Foreseeing political change and enduring positive and negative political cycles differentiates markets that are in the region for the long term. If you are in the region to stay, markets must be able to recalibrate their business plans and show clients that you are committed to a long-term relationship.”

Sonville expects that conversations at FIDES will focus around speculation on further merger and acquisition activity, Lloyd’s opening offices in Bogota and Mexico City, new Lloyd’s syndicates arriving in Miami, versus Bogota and Mexico City, and development of cyber.

“Our presence in the region was established eight years ago through our offices in Miami and Santiago, so in spite of economic cooling, positive and negative political cycles in various countries, we remain committed to growing our footprint in LatAm and servicing our clients across multiple classes of business,” he said.