What opportunities does Brazil offer to international reinsurers and brokers? Similarly, what can they offer the Brazilian market?
Brazil is interesting at the moment, as the whole economy is growing.
This growth, coupled with events such as the 2014 World Cup and the 2016 Olympics, means that opportunities for insurance and reinsurance are significantly increasing. This growth will continue and therefore so will the demand for reinsurance, particularly in the areas of construction and property.
In terms of what reinsurance can add, Brazilian insurers can reap some
of the benefits as per their global peers by providing capital and balancing portfolios. Reinsurance helps in the event of major losses and it has been proven that Brazil can suffer such losses. Taking these factors into account, it is clear there is a need for reinsurance in Brazil to continue supporting balance sheets and providing protection to local companies.
How is Aon Benfield looking to take advantage of those opportunities?
From a reinsurance perspective, we will be fulfilling a more consultative
role, helping companies to protect their balance sheets, along with assisting with modelling portfolios and aiding companies to understand their risks.
We will also assist companies on how to optimise portfolios, along with advising them on capital and the cost of that capital. Then there is the help we can give around the lines of business which companies want to write and how they should be pricing those.
From our perspective, we will continue to deliver what we do best
in other parts of the world and apply the lessons we have learnt from those experiences.
What kind of challenges does Resolution 225 pose to both the Brazilian market and international reinsurers?
Brazil already has a reinsurance market formed from local companies
and more are applying, so capacity is not an issue. However, Resolution 225 will pose more challenges to multinationals than it will for local companies, which will be 40 percent reinsured by companies that are registered locally, mainly by the IRB.
The multinationals’ use of global programmes (which allows them to
leverage better prices than from a country standalone programme) will have a 20 percent limitation on placing reinsurance into a sister company. However, the Brazilian market is still attractive to reinsurers and should continue to develop locally. It will restrict reinsurers from spreading the use of capital across multiple territories.
What ramifications will Resolution 35.615 have on the reinsurance market in Argentina?
It will have the same impact on multinationals, but Argentina is
a different market to Brazil, in that it is not as large or as attractive to reinsurers. It doesn’t have a strong reinsurance presence, which Brazil does—Brazil built up a local reinsurance company market when it didn’t have 40 percent mandated locally. Argentina has gone to 100 percent straightaway.
It will definitely increase the transactional costs for insurers and reinsurers,
which could mean that reinsurance capacity reduces dramatically, and eventually this will end up costing the primary consumer more, as insurers have to put up their prices.
What role has the reinsurance industry played in dealing with last year’s earthquake in Chile? What part has Aon Benfield played in this?
Losses from Chile are expected to reach around $8.5 billion and
95 percent of that is reinsured, with a comparable US incident usually only being 50 percent reinsured. This really puts this event into perspective, especially in regards to the pure scale of claims which came through.
However, despite the massive amount of losses which the industry had
to deal with, I believe it handled the situation very well. Reinsurers were more worried about getting money to the affected areas, than the details of individual policy coverage. This played a big role in dealing with the situation quickly and effectively—for example, around 80 percent of all commercial losses were paid within the year.
Overall, the reinsurance industry reacted well to the earthquake and certainly Aon Benfield played a key part in that.
Summer 2011 | INTELLIGENT INSURER | 53
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64