According to a report from Aon’s Reinsurance Solutions, Latin America continues to present reinsurers with a host of diversification and growth opportunities.
Aon’s report suggests the renewal outcomes in Latin America varied by territory at January 1, with many catastrophe and loss-exposed markets experiencing price increases and capacity constraints.
Property catastrophe reinsurance rates increased for several hurricane-exposed regions, namely within the Caribbean, where capacity was more limited.
Aon says that overall, property catastrophe price increases in Latin America were in the low double digits, with considerable variation between markets.
Meanwhile, agri-reinsurance in Brazil experienced some of the region’s largest price increases and limit decrease on policies in response to large drought losses.
Further, reinsurers sought to narrow coverage for non-natural catastrophe perils such as war, terrorism and cyber, as well as restricting natural catastrophe cover to named perils in upper layers for regional programs.
Aon’s report suggests that robust levels of competition and capacity in Latin America meant insurers were able to avoid the highest price increases sought by a small number of international reinsurers.
In addition, the renewal benefited from ongoing work to differentiate Latin American clients and attract reinsurance capacity to the region.
Aon’s report noted, “Outside agriculture, property catastrophe results in Latin America have been largely positive, while a number of domestic markets continue to demonstrate underlying growth.
“Capacity, however, is not keeping pace with increased demand for reinsurance, although the devaluation of the local currency against the US dollar has worked in the market’s favour at this renewal.
The report continued, “When the dust settles on the renewal, we are optimistic that capital will begin to enter the reinsurance space throughout 2023 and stabilise the market, particularly as the benefit of higher pricing and interest rates becomes visible in earnings.
“For insurers, capital and reinsurance optimisation is more important than ever, especially at a time of increasing exposures, constrained reinsurance capacity and macro-economic uncertainty.
“However, clients have a number of levers at their disposal, including integrated placements across property and casualty, legacy and structured reinsurance solutions, strategic consulting and data analytics.”
Aon concluded, “Rest assured, we are working hard to create additional capacity and ensure that reinsurers can support our clients in Latin America to the fullest.”
