On Monday, November 7, in Santiago, Chile, associations representing insurers in Argentina, Brazil, Chile, Paraguay and Uruguay signed a technical cooperation agreement to promote the development of insurance across the region. The agreement provides for a series of measures and initiatives to exchange information, share best practices and hold technical training events to promote the development of the Latin American insurance market. The five countries are members of the South Regional Commission of the Inter-American Federation of Insurance Companies (FIDES).
The president of the Brazilian Confederation of Insurers (CNseg), Dyogo Oliveira, who is also the chairman of FIDES’ South Regional Commission, stressed the importance of this initiative. “We face similar challenges and opportunities in our countries, which makes this technical cooperation agreement an invaluable tool to boost the development and growth of the insurance market in the South region,” he said. He emphasized that insurance coverage is low across the region. “In Brazil, auto and health are the only segments with a penetration rate of more than 30%. In other areas, such as home, life and small and medium enterprises, coverage is below 15%,” he added.
According to CNseg’s president, other key areas that will benefit from the cooperation agreement include regulation, compliance, ESG and Open Insurance. “Brazil was the first country to implement the Open Insurance model and we can assist other countries are following this example, helping them adapt to changes in consumption habits brought about by new technologies,” he said.
In the area of environmental, social and governance (ESG) issues, Oliveira mentioned that the Brazilian Private Insurance Regulatory Agency (SUSEP) recently issued new regulations featuring a variety of new requirements. Management of sustainability risks must be integrated into risk management structures and operational processes, especially with regard to pricing and underwriting of risks, selection of investments and selection of service providers. It should be possible to establish risk concentration limits and/or business restrictions. The first workshop for the five countries in question will take place in March, in Brazil, Oliveira said.
Rodrigo Bedoya, the president of FIDES, said that the new initiative comes at an important time for the region. “Little by little, we are returning to normality, and this exchange of professional experience is invaluable, letting us share each country’s concerns and continue to expand the industry, with stronger collaboration ties to do more business,” he said.
Jorge Claude, the executive vice president of the Chilean Association of Insurers, said that the agreement is of great value to the countries involved, which face similar challenges and opportunities, especially the need to adapt to the demands of consumers with new consumption habits. “Chile has the highest insurance penetration among the five countries in question and we pay out billions in claims every year. However, one important issue for us is regulation. We are being dragged into banking regulations. We need to be able to show everyone that the insurance industry is different from banking, so we must have specific insurance regulations rather than come under banking regulations,” he said.
Gonzalo Santos Mendiola, the president of the Argentinean Association of Insurance Companies, welcomed the initiative to work together. “We are at a unique moment in the world in terms of transformation. We need to increase insurance penetration and get a better understanding of what consumers need. We also face the challenge of attracting talents to companies. In this discussion forum that we have launched, we will have a great responsibility for helping companies with staff training,” he said.
Preparation for new risks
Antonio Vaccaro, the president of the Paraguayan Association of Insurance Companies, said that training people is the overriding objective. “We have had excellent results from working groups that help us understand other markets and stay one step ahead of events. It is crucial to be better prepared to deal with new risks and changes that affect our business, as happened in the pandemic. We have some specific characteristics and we can contribute a lot to the debate,” he said.
Alejandro Veiroj of the Uruguayan Association of Insurance Companies stressed that he is looking forward to starting work on this technical partnership. “We have businesses in common and we are excited about what is happening in Brazil, a country that is leading the Latin American market,” he said.
Insurance in the spotlight
Antonio Trindade, the president of Brazil’s National General Insurance Federation (FenSeg), said that the agreement’s timing is spectacular. “The pandemic raised public awareness of insurance and we must take advantage of this moment to deliver products that meet the needs of society. The mass market segment has low penetration rates and the SME area has tremendous business opportunities. We have a lot of experience to share and we can advance together as the sector develops,” he said.
Denis Morais, the president of Brazil’s National Federation of Lottery Bond Companies (FenaCap), explained that the sector has great capacity to connect to other products and markets, with a diversity of products. “We have experience with bancassurance products to share. We have worked with policies linked to charities and this has great scope for growth. It is good to be able to exchange information and bring insurance to the prominent place it deserves in society,” he said.
The Chilean capital was also the stage for the international launch of the Western Hemisphere Insurance Conference of the Inter-American Federation of Insurance Companies (FIDES), which will take place in Rio de Janeiro in September 2023. Santiago also hosted meetings of the General Assembly of the Global Federation of Insurance Associations (GFIA), as well as meetings of FIDES’ Presidential Council and the General Assembly, and the Annual Conference of the International Association of Insurance Supervisors (IAIS).