Global reinsurers continue to look to Latin America for diversification, even though the natural catastrophe-prone region has not seen any significant market-hardening events since 2013, according to a new report from ICMIF Supporting Member AM Best. As a result, the reinsurance market in Latin America remains soft.
AM Best believes that the strengthening of the regulatory frameworks in some Latin America countries could lead to market consolidation and increase overall demand for reinsurance. Lower interest rates and protectionism, however, could limit those prospects, according to the report.
The new Best’s Market Segment Report, “Global Reinsurance: Fighting the Last War,” notes that on a global basis, the days of large catastrophic events triggering widespread market hardening are gone, replaced by pockets of microcycles, based on geography and loss experience.
The Latin America region remains attractive owing to its growth potential and strengthening regulatory frameworks, as well as primary companies’ profitable risk selection, says the report.
“However, limited economic prospects, potential protectionism and lower interest rates could limit business opportunities and pricing terms for participants in the region,” said Elí Sánchez, associate director. “Insured losses may have been low in recent years, but market participants will be aware of the region’s susceptibility to earthquakes.”
Historic catastrophe events in Chile, Mexico, and more recently, Peru and Panama, should be considered as reinsurers estimate their underwriting capacity, pricing and risk management initiatives in Latin America. In addition, the region remains susceptible to climate change has been experiencing increasingly volatile weather patterns.
AM Best’s market segment outlook on the global reinsurance sector remains stable, primarily reflecting a more-stabilized, non-life pricing environment, as well as a stable market environment in the global life reinsurance segment.
Alfonso Novelo, Senior Director, Analytics, AM Best (Mexico) will speak at the forthcoming meeting of the Latin American Association for Reinsurance Education (LARG Group) taking place in Medellín (Colombia) from 17 to 20 September 2019. The LARG Group is a unique group of ICMIF members which was formed in order to allow the members to purchase reinsurance collectively. One of the key benefits of being a member of the LARG group is access to technical and reinsurance training and attending the annual meeting. The meeting brings LARG members together to discuss issues such as underwriting, claims, microinsurance, strategic planning and catastrophe reinsurance as well as providing the opportunity to discuss reinsurance treaty renewals for following year with their reinsurers and reinsurance broker Willis Re.
AM Best is also a Gold Sponsor of the ICMIF Biennial Conference which takes place in Auckland (New Zealand) from 12 to 15 November 2019 with Andrea Keenan, Senior Managing Director – Strategy & Communications, AM Best (USA) taking part in the agenda. More information on the Conference can be found here.