During the first quarter of 2021, the scenario of the insurance industry in Latin America has shown a lower than expected growth, mainly due to the adverse economic effects caused by the pandemic. However, a more auspicious second half of the year is expected, with increased demand for reinsurance generated by greater uncertainty surrounding the health crisis, a large number of disastrous weather events, and the increased ability of insurers to purchase reinsurance.
In addition, local insurance companies have extensive knowledge of regional markets and global competition, being aware that insurance-linked securities (ILS) activity in Latam remains limited.
In these contexts, accurate and effective data capture is critical to ensure catastrophe protection. Complete statistics are essential, as they allow for the broad use of alternative capital sources, acquiring an increasingly prominent role in the Latin American insurance market.
In Brazil, for example, in January of this year, the insurance regulator SUSEP initiated the creation of a regulation for the issuance of ILS and reinsurance vehicles, with which the country is able to issue ILS of its own, fostering its incipient reinsurance and insurance industry.
Competition from global reinsurers, specifically European reinsurers, allows Latin American insurers to focus their efforts on the region’s own risks and insurance, which are characterized by low levels of insurance penetration, ranging from 2% to 4%.
