Latin America and Asia see big growth in ‘true risk managers’ as insurance becomes business enabler

Risk and insurance managers in key growth markets Latin America and Asia are becoming more sophisticated as their businesses expand beyond national and regional borders, according to an expert panel from Marsh in a webinar hosted by Commercial Risk. Expansion creates opportunity for companies, but a more complex risk profile adds to the workload facing risk managers and opens the door to a multitude of different legal and regulatory systems. Douglas Hardman, multinational leader for Latin America and the Caribbean at Marsh, said: “Insurance buyers in Latin America are evolving to become true risk managers,” with insurance seen as adding value to a business, rather than just a cost. “It’s no longer enough for them to just buy insurance, and they’re looking to connect the risk with a corporate philosophy, with a strategy and a risk management approach,” Hardman said. Historically, risk managers in Latin America have been cost sensitive and cost focused, Hardman explained. “But fast-forward to now and buying insurance is seen as not enough – businesses need to handle and properly manage risk. More and more, insurance in the region is increasingly seen as an enabler to grow the business.” “The expansion and speed at which multinationals are multiplying is astonishing,” Hardman said. But he warned that growth into new markets exposes companies to new risks and regulations. As organisations expand and grow into new territories, global programmes stand ready to help risk managers navigate emerging risks, the brokers stressed. Diana Accordi, multinational advisory practice leader for Asia at Marsh, said Asian buyers have a much better understanding of the benefits of multinational programmes now, with demand on the rise. “Across the region, there is a lot of appetite,” Accordi said. “We have international markets licensed in the region through Singapore and Hong Kong, and we have capacity in Asia from insurers in China, Korea and Japan. We can start building regional programmes with them,” she explained. Buyers in Asia are starting to think more globally, both in terms of strategy and risk solutions, Accordi added. “We see this evolving, quite quickly actually, especially in the last five years,” she said. While some risk managers will prefer to use domestic carriers providing global solutions, others will adopt a mixed capacity approach using an international fronting carrier. Finding the right fronting partner is key when setting up global programmes, Accordi said. “In Asia, there still has to be strong consideration for local regulation. Ask your clients: if you choose one programme over another, what will the consequences be, how will claims be paid and will there be tax implications?” Jennet Lewis, multinational leader for the UK at Marsh, said that while there are about 18 “pretty viable” global programme markets, it’s an exciting time to be in the multinational space in London, where the company market has evolved to take a share of the pie. “We don’t see London as losing its edge,” Lewis said. Insurance carriers from Asia, led by Japanese firms, are investing in London operations to undertake large global programme business and serve European and UK clients. “They realise the growth space has to be in either UK-domiciled or international-domiciled insurance programmes,” Lewis said. Singapore has become one of the strongest global programme hubs, outside of London and the US, Accordi said. Capacity is provided by regional Asia insurers but all major international carriers are represented in Singapore, supporting clients in Asia, Australia, the Middle East, Europe and North America. Leading risks Companies in both Latin America and Asia face increased exposure to natural catastrophes, putting coverage front and centre of any insurance programme. Accordi said Asia’s typhoon season used to run from June to September, but now extends from April through to October and even early November. This is elevating the risk of flood on par with the more historical threat of earthquake. Hardman said the risk of cat exposure for risk managers in Latin America has driven interest in parametric insurance in the region, with product innovation a key feature of the market today to address emerging risks and mega trends. Aside from nat cats, social and political instability in Latin America puts political risk top of mind for all companies operating in the region, Hardman said. Cyber is a key risk for clients in both Latin America and Asia, with companies needing to understand how their digital exposure affects their corporate strategy and risk profile, Hardman said. Accordi added that cyber is also complicated from a regulatory perspective, with each country in Asia operating its own data privacy rules, while Asian companies investing in Europe are mindful of the GDPR. Regulation is a wider challenge for risk managers and insurers in Asia, Accordi said, with a significant number of countries operating their own tariffs for certain categories of risk and constant changes in tariff rates. But there is potential, or ambition, for regulators in Asia to work more closely together, similar to the European Union, which could lead to freedom to trade across the region for financial services.

Latin America and Asia see big growth in ‘true risk managers’ as insurance becomes business enabler

Expansion into new territories brings new risks and regulations, says Marsh panel

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