Political situation and new players pose challenges
The current macro-economic and political situation in Latin America is a key challenge to re/insurers looking to take advantage of new opportunities in the region.
Although the challenge affects the re/insurance market as whole, there are some segments that are more acutely impacted, according to Ricardo Ortega, head of broker relations Latin America at Beazley.
The energy and agricultural insurance segments are hit hard as a result of declining commodity prices (for oil and grain), while the marine insurance market is hit as a result of falling volumes of exports. The construction insurance market has been affected due to the decline in the number of infrastructure projects, he explained.
Ortega added: “Additionally, local re/insurance markets remain very competitive with new players seeking growth in the region, therefore creating pricing challenges.”
The Latin American market has “historically been dominated by traditional insurance products”, which means that there are opportunities for specialist re/insurers like Beazley to bring new and innovative products to local markets.
“While Beazley sees attractive growth opportunities in Latin America, our focus is not on growth for growth’s sake,” noted Ortega. “Insurers that set themselves hard and fast targets for top line growth tend to lose money very quickly.”
Beazley’s initial objective in Latin America is to strengthen its existing relationships and to develop business that doesn’t usually come to Lloyd’s.
The firm has offices in Rio de Janeiro and Miami; the latter writes property, agriculture and specialty lines treaties, among others.
Over the past year, the company has continued to invest in its underwriting expertise with a series of appointments and has partnered with Generali to manage data breaches for Generali Brazil’s new cyber insurance offering for its corporate and commercial clients.
At the conference, Beazley plans to talk about stock throughput, which “brings together the ‘warehousing’ risk typically handled by the property market in many Latin American markets and the ‘cargo/in transit’ risks of the marine market into one single product, making it a simple solution”.
Ortega explained that in many Latin American markets these risks have traditionally been handled separately, but Beazley can “can provide specialist knowledge and capacity”.
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