In line with its strategy to unite traditional marine reinsurance, consulting and white-label primary insurance concepts for clients, Munich Re is opening a new marine hub in Latin America. We want to strengthen our presence in the region and foster cooperation between marine client managers and underwriters Michael Yeats has been appointed as expert with primary marine experience across the region.
The highly diverse and dynamically developing economies of Latin America currently represent approximately 4% of global primary insurance premiums, a figure that is expected to rise to 7% by the year 2020. Annual growth of 4.6% is forecast for non-life business up to 2020. Brazil stands out with over 50% of the region’s gross written premium, but Colombia, Mexico and Chile are also expected to unlock their potential and account for expanding shares in future. The region is also key in marine insurance: in hull business alone, it is the world’s fourth-largest market – with vast growth potential.
A diverse region with huge potential
Accordingly, Munich Re is deepening its commitment to the marine market in Latin America, establishing a new marine hub in Bogotá, Colombia. The move is part of a broader strategy to combine all relevant reinsurance and primary insurance expertise within the Global Marine Partnership.
Already home to many major clients and a Munich Re office with around 30 staff members handling specialised functions, the Colombian capital is an ideal location from which to show a stronger presence across Latin America. But above all, the city’s central vantage point makes it attractive – any of Latin America’s major centres can be reached by plane within roughly five hours. And of course Colombia itself has huge growth potential in insurance. With its strong infrastructure and long Atlantic and Pacific coastlines as well as inland waterways, the country is very interesting for marine business.
In addition, the marine insurance organisation Asociacion Latinoamericana de Suscriptores Maritimos (ALSUM) is located in Bogotá. ALSUM is the prime specialised forum for discussion, learning, consultation and exchange of information for maritime insurance in Latin America. To contribute to this important institution, Munich Re has joined the ALSUM Board, a step that also further increases the company’s regional presence.
Latin America is important for a number of reasons. It makes up 4% of global primary insurance premiums, and we expect that share to continuing growing significantly up to 2020. With the new Global Marine Partnership hub in Bogotá, we want to show our commitment to the market, and we are building upon the hub concept already implemented in 2015 in the Asia-Pacific region and based in Hong Kong.
New leadership with a client focus
To head the new Latin American marine headquarters, we have brought Michael Yeats on board. A holder of American, British and Colombian citizenship, Michael is fluent in both Spanish and English. With an extensive track record in marine insurance, he is well prepared for the responsibilities of spearheading the new initiative. Michael spent ten years in primary marine insurance before entering into reinsurance, which gives him important insights into how clients think, what their goals are and what challenges they face.
In addition, Michael has been living and doing business across Latin America for many years. Getting to know the very diverse governments and regulatory demands as well as the different facultative and treaty risks has deepened his understanding. “We are trading in a complex regulatory environment across cultures, and I really appreciate the need to listen closely to clients and look at each risk individually”, says Michael.
Challenges shared by Latin American insurers include overcapacity and generally soft markets. Many players are competing with commoditised products, an environment that leads to big opportunities for those companies capable of setting themselves apart. “We want to work with our clients to find new ways for them to grow. They can secure a competitive lead and drive growth by adding new features to their products. When you have a lot of players offering essentially the same thing, the future belongs to those that can innovate.”
To serve this need of our clients, we are taking a consultative approach. In many cases, primary marine insurers in Latin America have been continuing their reinsurance programmes more or less unchanged for many years. Their needs, however, may have changed, and Munich Re is positioned to support them in optimising both their reinsurance covers and product ranges to enable them to generate more business.
When we say our approach is consultative, it’s not just another buzzword. We mean we go in and listen to the client, ask questions and listen more. Only then can we match the client’s needs with what we have to offer and come up with a customised solution.
Our marine knowledge is globally connected
A key component of our consultative approach is our extensive network of marine and offshore energy specialists, many with decades of experience in the industry. Our experts are in continuous contact with each other, regularly sharing knowledge about special risks and situations. If a client faces an unusual challenge, the underwriter can talk with colleagues all over the world and compare examples of applicable solutions developed in the past. Michael Yeats actively encourages clients across Latin America to take advantage of this global knowledge, regardless of whether it leads directly to new business: “We invite our clients in the region to call us if they’re uncomfortable with a marine risk, even if it’s just to consult. We want to create more value for our clients.”
Project cargo cover is an expanding area where we can deliver exceptional know-how in the region. Another way the marine experts offer value to clients is through specific primary insurance concepts to address current and emerging trends, which can even take the form of white label products. Based on its strengths in fields outside of marine, we can support primary insurers in enhancing their offerings with special components. Marine underwriters collaborate with our engineering experts, for example, to develop additional features like delay of start-up (DSU) covers for marine projects.
In many cases, the company can draw on proven success models from other international markets and apply these to Latin America. With innovative cyber risk solutions, for instance, the experts are supporting clients in tapping new opportunities that arise from digitalisation.
Offshore energy in Mexico, Venezuela, Brazil, Argentina and, increasingly, Colombia is expected to become a major business driver in future. Munich Re is in a strong position to work with insurers and master the marine and engineering risks that will accompany the dynamic growth, in terms of both expertise and capacity.
We have to get closer and stay closer to the client. We also want to align client management and marine underwriting and bring them closer together. It’s important that the underwriter really understands the local market and offers embedded solutions. We can deliver not just standard cargo covers, but also nonstandard products we develop with our clients.