The specialist Lloyd’s of London insurance and reinsurance marketplace is “absolutely committed” to Latin America and will continue to expand its presence and capabilities in the region, ultimately helping to increase insurance penetration levels, according to Lloyd’s Chief Executive Officer (CEO), Inga Beale.
In a keynote speech delivered at Lloyd’s of London’s first ever Meet the Market in Miami, CEO Beale underlined the importance of the Latin America insurance and reinsurance industry to the Lloyd’s marketplace, saying that Lloyd’s is “absolutely committed” to the region.
Insurance and reinsurance penetration in Latin America is extremely low when compared with other parts of the world, with non-life insurance penetration across Latin America at just 1.8%, which, Beale explained is very detrimental to economic growth.
As with other parts of the world that experience low insurance penetration, when disaster strikes the cost burden often falls on governments and businesses to provide the recovery, something that should be taken on by the world’s insurers and reinsurers, ultimately taking the risk off government balance sheets, and ultimately the taxpayer.
As an example, Beale discussed the Ecuador earthquake in April 2016, which President Rafael Correa estimated to cost between $2 billion and $3 billion. In the worst case scenario of highest total damage and lowest insurance loss, the coverage gap could be as much as 89%, said Beale.
“The region is still lagging behind many other parts of the world in infrastructure areas, particularly in sanitation, telecoms, energy and transportation. For Latin America to achieve sustainable growth, the proper infrastructure must be in place and the private sector needs to play a bigger role in these projects – and of course supported by insurance,” said Beale.
Discussing what Lloyd’s can do in the future to support the development of the Latin America marketplace, Beale highlighted that Lloyd’s has expanded its footprint in Colombia and Mexico, and also welcomed its first Mexican re/insurer, Patria Re, to the Lloyd’s platform.
“Latin America is a dynamic region in the world for insurance industry growth. In fact McKinsey estimates that Asia and Latin America will represent 37% of the global P&C market in 2020 or 745 billion dollars. As cities expand across the region, so does the value of assets requiring protection and we see significant potential for development in specialist insurance and reinsurance. We want Lloyd’s to be part of this development,” said Beale.