September 10. The demand for reinsurance in Latin America (LatAm) is expected to increase during the second half of this year due to heightened uncertainty linked to COVID-19, according to a report by Fitch Ratings.
The expected increase is also due to numerous high-impact weather events and primary insurers’ stronger ability to purchase reinsurance given increases in their own pricing.
However, this might be offset by lower insurance industry growth given the pandemic’s adverse economic effects in the region.
Fitch views major LatAm reinsurers as the most resilient to the changing reinsurance landscape. This group’s largest and best-positioned competitors possess strong franchises and deep knowledge of regional markets.
The report noted that Hurricanes Eta and Iota in Central America, the drought and wildfires in South America and an earthquake in Puerto Rico accounted for insured losses of more than $2 billion, which highlights the importance of continuing to narrow the protection gap.
The competition from global reinsurers, particularly European reinsurers and their larger reinsurance capital, allows LatAm reinsurers to focus most of their efforts on regional insurance sectors that are marked by low levels of insurance penetration between 2% and 4%.
Source: Reinsurance News