CALL FOR NEW LATAM REINSURANCE INSTITUTE MET WITH APPROVAL
Barents Re general director urges cooperation between reinsurers in order to “strengthen the health of the sector in the region”
Barents Re’s Gerardo Garcia has suggested that the creation of a Latin American reinsurance “agency or institution” could help strengthen the sector in the region and direct its development by collating regulatory information and defining industry best practice.
The role of regulation in the Latin American insurance and reinsurance markets was a key subject of debate on Day 2 of this year’s Latin America Reunión in Panama City, after attendees debated the efficacy of existing regulation and how new rules might best shape the industry going forward.
Gerado Garcia, general director at Barents Re, said he believed that “reinsurers should have some sort of agency or institution which we would have to pay for ourselves that would help us to benefit the region – a sort of central repository which would seek to solve some of the industry’s problems”.
His call for the creation of “a credible agency which could collate information from regulators etc.” proved popular with fellow professionals. He said such an institute would help strengthen the health of the sector in the region and define more clearly the rules of engagement”.
Garcia said he believed that “regulation, if it’s straightforward and on a level playing field, is not an issue in itself”, although he condemned protectionist regulation in Brazil and Argentina, saying that “if a market restricts our access, that market should also have a restriction in capacity.”
He went on to say that the major regulatory issues for reinsurers are those instances “when a regulator interprets a rule for a specific market in a way that in reality is unhealthy for that market”, and referred to some Latin American countries which prohibit excess of loss reinsurance as prime examples.
This past Monday, Barents Re had the honor of receiving in a private reception dinner some of the most leading figures of the Latin American reinsurance market.
The venue took place on the VIP Room of Manrey Hotel in Panama, all accompanied by a beautiful view, live violins, exquisite food and the appropriate company were the key ingredients for a remarkable evening.
13 November 2012 |By Anthony Murtagh
Inaugural conference witnesses call for greater development of micro life and health insurance products for low income populations.
Leading figures from across Latin America gathered in Panama City on Tuesday for the inaugural Global Reinsurance Latin America Reunión 2012.
Presenting at the event, Barents Re chief underwriting officer Arturo Falcon said that the industry’s reaction to severe national catastrophe events in recent years – including last year’s Japanese earthquake and the Thailand floods, which made 2011 the second costliest year for the industry – confirmed its resilience.
“The events in 2011 were an ‘earnings event’, impacting results rather than the capital positions of reinsurers,” he said. “Therefore, outside of the regions affected we did not see any major increases in pricing, so there’s an abundance of capital out there, as shown by the competitiveness of our markets.”
Focusing on the Latin American market, however, Falcon said that “the region needs to have a greater penetration of the insurance sector within society”, and called for the development of new life and health micro-insurance products “that can reach low income populations”.
Latin America currently accounts for 3.36% of global market premiums, and the region’s per capita premiums as a percentage of gross domestic product is extremely low compared to the USA, Europe, and Asia.
Speaking about pricing in Latin America, Falcon said that Barents Re “expect[s] to see prices remain flat or even see slight increases in certain markets”, but added that across the board reductions were not anticipated.
“Casualty lines remain very noble and we do not expect increase in rates,” said Falcon, before adding, “There is, however, more demand for liability products, particularly D&O coverage.”
Falcon concluded his presentation by saying that regulatory changes in some Latin American countries had made restricted investment by multinationals, and said this had to change. “We need to develop free market conditions, with strong regulations, to ensure a well-capitalised, healthy insurance and reinsurance sector that can respond to natural catastrophes and provide markets with social responsible solutions.”