Highlights of the 2019 Miami Latin American Claims (Re)Insurance Forum

The fifth annual Miami Latin American Claims (Re)Insurance Forum, hosted by Kennedys and QLDG on June 11-14 2019, was a resounding success. Attended by in excess of 215 delegates from around the globe, the mix of delegates included as many as 45 industry-leading speakers. Companies represented included AGCS, AIG, AXA-XL, Axis Capital, Beazley, Brit, Chubb, Continental Seguros, Everest Re, FM Global, Generali, Hannover Re, Helvetia, Hiscox MGA, IRB Brasil Re, Liberty, Munich Re, Pacífico, Partner Re, R+V De, Rimac, SBS Seguros, Scor, Starr, StarStone, SURA, Swiss Re, Trans Re, Travelers, Validus Re, and Zurich.

For details, you can check the 2019 forum’s program here.

The forum kicked off with the Regional Market Leaders Outlook Panel, always an audience favorite, where the most relevant issues affecting the (re)insurance industry over the past year were discussed, as well as pertinent topics for the near future.

This year the panel engaged in a lively discussion on inclusion and diversity in leadership, China’s growing influence in Latin America, the future market impact of Venezuela, and the London Market’s role in Latin America in light of a global hardening market.

After a productive coffee break, a session on the Contraloría of Colombia’s recent decisions on claims-made policies and how these decisions affect financial lines policies followed. The panel discussed the recent increase in securities class actions originating from Latin America, the Lava Jato investigation’s role in the increase, the legal basis behind these class actions, and how underwriters are adapting their pricing models to account for this new risk.

The first day of the forum closed with two very interesting panels. The first was on regional issues with business interruption, in the specific context of mining and energy losses. The second panel was dedicated to Brazil and presented coverage success stories in property losses.

On the second day, the forum opened with another innovation by its organizers. For the first time, the forum gathered local market leaders to provide their insights on trending issues affecting their particular markets. The panelists led an engaging discussion on market penetration, a hardening market, the role technology will play in adding value to the (re)insurance business, and the role of parametric insurance in the future.

This was followed by a panel discussing the legal issues commonly found when dealing with claims in Latin America and particularly in specific jurisdictions such as Argentina, Brazil, Colombia, Mexico and Venezuela. The session explained the effects of inflation on the adjusting process of claims and the insured amounts when dealing with claims in jurisdictions with high inflation rates and hyperinflation. Then, the application of judicial interest, legal interest, and inflation in Brazil, Colombia and Mexico and how these calculations can increase a claimed amount when in litigation. The panel also discussed the repercussions of the OFAC sanctions when making payments of claims to individuals that may be included in the Specially Designated Nationals Lists, along with the compliance and due diligence a company must carry out in order to avoid any breach to the OFAC sanctions and how the sanctions may affect underwriting business in risky jurisdictions. The session ended with an overview of the regulatory changes expected in the region and how they would affect the insurance industry, if passed.

We then moved to an extremely interesting panel on cyber (re)insurance. It opened with an overview of the latest developments in technology over the past year, focusing on machine learning and autonomous vehicles. They also discussed on how the (re)insurance industry should better prepare themselves for cyber risks, how to manage property risks in the cyber era and the dangers of silent cyber. The conversation transitioned to a perspective on social engineering and how losses stemming from it may fall under the cover of a BBB policy.

The second day closed with mock mediation on environmental liability. The mock mediation related to a claim emanating from an oil pipeline spill caused by illegal tapping by the fictional Olive Oil (insured), helped explain the benefits of mediation as a method of dispute resolution.

We wrapped up the forum with a final day of two panels discussing construction risks in Latin America. A hypothetical Building Information Model (BIM) of a tunnel project in Peru showed how BIM could be used both at the earliest stages of construction, thus saving time and money and minimizing risk. It also showed how Loss Information Modelling (LIM), a technology developed by JS Held, could be used to analyze claims. It was fantastic to see the use of BIM to access disaster sites, which would have otherwise been impossible to access. Given that BIM will become compulsory on large construction projects in Brazil in the near future, it led to a very lively debate amongst the panelists and the delegates. The panel also highlighted the important distinction between “a defect” and “defective design,” which included, amongst many laughs, a broken glass and a pack of toilet roll. Having set the stage, the BIM model came alive with a hypothetical tunnel claim that the panelists used to discuss the important, but often misunderstood concepts of defective design, exclusion clauses, and specific challenges encountered on tunnel projects.

The final panel used the same hypothetical case study of the tunnel in Peru and allowed an adjuster to discuss the importance of considering when the loss arises - whether during construction, the maintenance period, or in the operational phase of the project - and how different policies would respond accordingly. This is an issue regularly seen in Latin America as there is often a lack of clarity in policy language over when one phase ends and another begins. This fed nicely in to a discussion with forensic accountants who considered how they would calculate a delay in a start-up claim and how BIM may help with this. The lively session, accompanied by hard hats worn by the panelists to symbolize that they were speaking as “risk managers,” rounded off the forum nicely with a case study considered from beginning, middle, and end.

After hearing all the engaging panels, the future of the industry in Latin America looks positive and with lots of opportunities. The number of companies attending the forum has been increasing through the years, in 2019 we had a record of companies attending and we expect it to continue to grow. The 2020 Miami Claims (Re)Insurance Forum will be held at the Four Seasons Hotel in Brickell from June 16 to June 19 2020. Topics and registration details will be announced soon.