Geography Trends
Latin America
Latin America Q3 2021 Overview
See below for insights related to the landscape, market dynamics and claims dynamics in Latin America, or select a geography below to take a closer look.
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Latin America Landscape
Prospects for Latin America reflect the very diverse countries that make up the region. In each country, governments have sought to move toward economic recovery from the impacts of the COVID-19 pandemic, avoiding further lockdowns, but vaccination campaigns in the region have seen mixed results, with Argentina and Brazil, for example, having so far fully vaccinated only a minority of their populations. Latin America’s economies are also naturally impacted by difficulties in global supply chains and by rapidly rising energy costs, especially as regional droughts have reduced hydroelectric power generation.
The challenges of the pandemic, exacerbating existing economic difficulties, and social divisions have fuelled political discontent across the region. Incumbents in Argentina, Brazil, Chile, and Colombia face protest and strong challenges in upcoming elections, while Ecuador and Peru have both seen recent elections deliver unexpected victors.
Insurance market conditions have generally stabilized, but still vary widely based on line of business, location, and risk profile. Organizations with favorable risk quality, robust exposure detail and strong risk management practices are generally experiencing favorable conditions while poor performing risks are experiencing few options and a reduction in capacity.
Market Dynamics
Rates
Pricing remains challenged in some industries (mining, construction, agriculture), and products (e.g., Cyber, D&O, Products Liability, Crime) while Auto, Cargo and Judicial Bonds are experiencing more favorable conditions.
Capacity Continuing shifts in appetite have led to a withdrawal of capacity from some poor performing spaces, driving a greater need for coinsurance, reinsurance, and layered placements.
Underwriting Underwriting is more rigorous and stringent, with more involvement from central teams. There is a heightened focus on risk controls, especially related to Cyber and high hazardous Property segments.
Limits With a few notable exceptions, most placements are renewing with expiring limits. In some cases, increased limits can be achieved.
Deductibles Insureds continue to explore deductible changes as a mechanism for offsetting premium costs; however, most placements are renewing with expiring limits.
Coverages Coverages are generally stable, with common exclusions such as Strikes Riots and Civil Commotion, Contingent Business Interruption, and Communicable Disease continuing to be mandated.
Claims Dynamics
Challenges continue: The claims environment remains very challenging, with insurers making restrictive interpretations of policy conditions, delegating to loss adjusters, who in some cases define the claim and involve lawyers in the definition of claims.
COVID-19 related delays: Overloaded claims staff charged with handling a large volume of COVID-19 claims and recent civil unrest in several countries contribute to the problems with claim processing delays and payments not being made timely to clients.
Inclination to deny coverage: Complex claims are escalated within carrier claims organizations to render decisions therefore lengthening the time to resolve. Overall, there is a concerning trend to find wording that enables coverage denial instead of supporting claim payment, although it is of note that some insurers are differentiating themselves by engaging more constructively.
