Insurance Day identified Argentina as an attractive market based upon its large population (second-largest in South America), established and steadily growing market (third-largest market in South America, with expected growth in the coming year of 2.5% to 3%) and low insurance penetration rates. In particular, Insurance Day noted a significant opportunity in the area of environmental damage cover. On a cautionary note, however, Insurance Day noted that high sovereign risk and a poor operating environment may limit growth and profits in the coming year. For further discussion regarding Argentina, please click here.
Venezuela was noted because, despite and indeed in part because of the interventionist activities of the Chavez government, the nation can offer higher premiums for companies willing to take the risks inherent in operating in a jurisdiction noted for its anti-foreign and anti-business policy bent. We note that the same (greater risk can yield greater reward) could be said for Bolivia, Ecuador and Nicaragua, although those countries largely lack Venezuela’s advantage in the energy market. For further discussion regarding Venezuela, Ecuador, Bolivia and Nicaragua, please click here, here, here and here.
Insurance Day noted Mexico as an intriguing opportunity based upon the growing energy sector, an increasing need for kidnap and ransom coverage (kidnapping rates in Mexico reportedly now exceed those in Colombia and Iraq) and a large infrastructure construction project funded by the federal government. However, the publication also warned that Mexico is more exposed to the financial crisis than other Latin American countries because of its close ties with the United States (80% of Mexican exports go to the U.S.) and has greater catastrophe risk than many due to its exposure to hurricanes and earthquakes. For further discussion regarding Mexico, please click here.
One Latin American nation not mentioned by Insurance Day that we believe certainly merits consideration is Costa Rica. Although the move has received little international attention, the country opened its insurance and reinsurance markets to competition in August 2008 after an 80 year government monopoly on the industry. Although Costa Rica’s insurance market is relatively small in comparison to the major Latin American markets, it is the largest and fastest-growing in Central America and the country enjoys a robust economy based on tourism, agriculture, manufacturing and high-tech. For further discussion regarding Costa Rica, please click here.
If you would be interested in learning more about Latin American (re)insurance markets and/or regulatory environments, please consider attending our upcoming free webinar on the past year’s most significant developments in the region (to register, please click here) or click the “Email the Editor” button and provide your contact information for follow-up by an EAPD attorney.