Upcoming Miami Seminar: Puerto Rico, a road to recovery

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While natural catastrophes are never welcome news, they are part and parcel of the insurance industry. And as devoted servants of that industry, it is imperative to be prepared to offer relief as residents, communities and businesses begin the task of putting life back together. As insurers and service providers send teams to the islands to assist insureds in evaluating and filing claims, the claims management process becomes fraught with logistical nightmares that if, unprepared for, can bring the resolution process to a dead halt.

Please join us on January 30 at Novecento Brickell as Carlos Rivera, CFE, MAFF, and partner in the Miami office of RGL Forensics, a global forensic accounting and consulting firm explores the difficulties associated with providing claims support in a CAT situation. Items to be discussed include: wide-area damage, utilities interruption, interdependency, contingent business interruption, logistical issues, ingress/egress, among others.

Date: January 30 2018

5:15 pm Registration

5.30 pm Conference

6:00 pm Informal discussion

6:15 pm Networking

Where: Malbec Room of Novecento 1414 Brickell Ave, MIAMI, FL 33131

Registration deadline: January 29 2018 at 1:00PM. Only 40 available tickets.

To register, please send an email to: hilda.welcker@kennedyslaw.com

Casual attire. Cost for this event: Free

Rivera-Carlos-Side-Web-2016Carlos Rivera is a Partner at RGL and is highly experienced in the review, analysis and measurement of US and international business interruption and property losses as well as disputes for clients in the insurance and legal markets. Carlos has evaluated economic damages in claims from a variety of industries: energy, manufacturing, mining, hospitality, pharmaceuticals, retail, logistics and distribution, and construction.

Carlos is fluent in English and Spanish and has extensive experience with claims in the US, Argentina, Chile, Brazil, Mexico, Guatemala, Costa Rica, Panama, the Dominican Republic, Jamaica, Puerto Rico, Venezuela, Colombia, Honduras and Ecuador.

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Cuba sanctions, a new era in the relationship between Cuba and the United States?

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We are firmly in Stage 2 of the new era in the relationship between Cuba and the United States. On 16 June 2017, US President Donald Trump finally unveiled his agenda regarding Cuba.

Trump instructed the Treasury to issue regulations that:

  • will end individual people-to-people travel1; and
  • prohibit economic, commercial and financial transactions between US and local companies linked to the Cuban Armed Forces, the Business Administration Group (GAESA in Spanish) and intelligence, and/or security services.

On 8 November 2017, almost five months after the President’s announcement in June2, the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) implemented changes to the Cuba sanctions program, which took effect on 9 November.

In order to ensure that US business do not trade with the Cuban military, the State Department issued a list of Cuban entities and sub entities with which direct transactions will not be authorized2 with a main impact on the tourism sector since it includes 84 hotels throughout the island, as well as two tourism agencies, five marinas and some companies related with the armed and Cuban military forces.

The new sanctions package, aside from establishing a general rule of denying licenses to export items for use of the entities on the list, enhances travel restrictions to better enforce the statutory ban on United States tourism to Cuba. The new sanctions package keeps US trips to Cuba for personal visits or study reasons, but determines that such trips should be supported by a sponsoring organization. However, for these trips to be authorized, the regulations determine that travellers will have to be accompanied by a person under the jurisdiction of the United States who is a representative of the sponsoring organization.

Individual trips without educational or academic reasons will no longer be authorized. Cuban-Americans will be able to continue to visit their family in Cuba and send them remittances3.

How do these changes affect companies in the US?

Domestic investment in Cuba, is largely military and state driven and the impact may be greater than it appears. For example in the construction business, Army sponsored real estate group Inmobiliaria Almest in partnership with the local subsidiary of the French construction company Bouygues, has developed almost all of the hotels erected in the past 20 years4.

Cuba continues to modestly invest in infrastructure and after the development of Mariel Exclusive Zone as discussed in previous articles5 it has now commissioned the expansion of the José Martí International Airport in Havana, the first foreign contract awarded by Cuba in the airport business6.

Moving forward, any US company will have to be authorized by the US Government (OFAC)7 to trade with companies linked to the Cuban military. Non-US companies, regardless of where they trade from, may be subject to the Helms-Burton Act8 which extended the territorial application of the initial embargo to apply to foreign companies trading with Cuba, and penalised foreign companies dealing with properties formerly owned by U.S. citizens but confiscated after the Cuban revolution. In other words, international companies trading with Cuba and the US might still needs to tread carefully in order to avoid fines by the latter.

Will there be any changes for the insurance-reinsurance sector?

Cuba, in order to circumvent the US embargo, places all its reinsurance through London market brokers, and the vast majority of reinsurers accepting Cuban risks are European. Every year, ESICUBA9 (Seguros Internacionales de Cuba S.A.) requests that brokers and reinsurers confirm their legal status regarding their US jurisdiction connections. Cuban authorities take the view that Lloyd´s of London, as a British domiciled entity, is not subject to US regulations and agrees to use Lloyds capacity for the reinsurance of their risks.

Conclusions

  • The announced changes to curtail the type of local companies that US companies can trade with.
  • The forthcoming regulations will be prospective and thus, they will not affect authorized transactions under existing specific licenses for travellers nor for those US companies previously approved.
  • Whilst the category of restrictions appears small, the impact could be countless because the main target is the Cuban military which controls the majority of the local infrastructure that could benefit from foreign investments for much needed upgrades, which would also need reinsurance capacity abroad.

 1 Among the 12 categories that currently allow US citizens to travel to Cuba, educational/people to people exchange, which is currently the most-broad group, allowing US citizens to travel the island to interact and engage with the Cuban people.

 2 https://www.state.gov/e/eb/tfs/spi/cuba/cubarestrictedlist/275331.htm

 3 https://www.whitehouse.gov/blog/2017/06/16/fact-sheet-cuba-policy

4http://www.cubadebate.cu/noticias/2016/10/16/explican-la-presencia-de-trabajadores-de-la-india-en-obras-de-la-empresa-cubana-almest/#.Waa8hbkzWUk

5 https://insuranceprofessionalsmiami.com/category/re-insurance-articles-cuba/

6 https:///118542_constructoras-tratan-acelerar-proyectos-hoteleros-habana.html

7https://www.treasury.gov/about/organizational-structure/offices/Pages/Office-of-Foreign-Assets-Control.aspx

 8 https://en.wikipedia.org/wiki/Helms%E2%80%93Burton_Act

 9 http://www.esicuba.cu/

Alex Guillamont, Head of Latin American and Caribbean practice at Kennedys.

Daniel Padrón Associate at Kennedys, Qualified in Cuba.

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Kennedys extends Caribbean reach with Puerto Rico association

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Global law firm Kennedys’ efforts to provide insurance clients with a comprehensive service across the Americas have been boosted by a new association with a boutique law firm in Puerto Rico.

The association means that Kennedys has extended its reach to seven new territories in Latin America and the Caribbean in just 18 months, following new offices in Brazil, Chile, Colombia, Mexico, Peru and Argentina – all of which complement the firm’s regional hub in Miami that opened in 2010.

San Juan-based Colón & Colón acts for a series of major insurers who see Puerto Rico as both an important jurisdiction in its own right and also as a gateway to Latin America. Its status as a US territory makes it a unique location.

Founded by Francisco J. Colón Pagán in 2002, Colón & Colón has experience on a broad range of insurance law issues, including property and casualty, products, aviation, marine and cargo, motor, environmental and medical malpractice claims. They advise on policy coverage issues and the defence of claims as well as subrogated recoveries.

Mr Colón Pagán is supported by partner Francisco J. Mercado Olivero, senior associates Johanna Rivera Cruz and Margarita Rosado Toledo, all of whom have more than ten years of experience.

Nick Thomas, senior partner of Kennedys, said: “Our expansion in Latin American and the Caribbean has been rapid but thought-through, with our clients consulted at every stage.

“We have many clients in common with Colón & Colón and they have highlighted both the value of a presence in Puerto Rico and the quality of work Francisco and his team deliver. This confirms the experience of our own lawyers’ dealings with Colón & Colón.”

Alex Guillamont, Head of Kennedys’ Latin America and the Caribbean practice, added: “Since we opened the Miami office for Latin America and the Caribbean in 2010, work related to Puerto Rico has increased year on year, so this was a natural step to take.

“The aftermath of the hurricane has raised a lot of issues for insurers and reinsurers they will benefit from the combination of Colón & Colón’s expertise and Kennedys’ international reach and experience.”

Francisco J. Colón Pagán said: “This is the perfect move for our firm. We enjoy a similar culture to Kennedys and have experience working with their colleagues in Bermuda, Miami and New York. We also envisage that the association will generate more and higher-profile instructions. Insurance work nowadays demands a global perspective, and Kennedys is leading the way in giving the industry what it wants and needs.”

This is the latest in a long line of global developments at Kennedys, including office openings this year announced in Bangkok, Bermuda, Melbourne, Mexico City, Paris and, just last week, Argentina.

Earlier this year Kennedys announced the completion of its merger with leading US insurance law firm Carroll McNulty & Kull, creating a global insurance practice; an, the firm completed its merger with UK-based commercial litigation specialists berg, which strengthened its global commercial litigation practice.

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Kennedys continues to expand in Latin America with Argentinian office opening

Kennedys is strengthening its presence in Latin America with the addition of an office in Argentina as its international expansion continues apace.

Buenos Aires City Hall and Cabildo

The Argentinian associate office, Alberto Bunge & Associates (ABA), will become a full Kennedys office from 1 January 2018. The office in Buenos Aires will become the sixth that Kennedys has opened in the region since July 2016 and will complement existing offices in Brazil, Chile, Colombia, Mexico, Peru and the regional Miami hub which opened in 2010.

The new office will be led by existing head of ABA, Alberto Bunge. Kennedys formed a formal association with ABA on 1 January 2016, and their existing team also comprises Virginia Couto and Marina Klein, both lawyers who specialise in insurance law.

The team will remain in their current office, located in Buenos Aires’ downtown quarter, within walking distance of a number of international insurers and reinsurers. ABA also has agents in other jurisdictions within Argentina, ensuring that clients will be able to access services outside of the capital as well.

The focus of the office will remain on larger and complex insurance and reinsurance matters, including coverage, defence and policy wording for all lines, particularly property and casualty, energy and financial lines. The office also has a strong regulatory practice, often working in tandem with the Miami office.

Argentina continues to be the third largest economy in Latin America, behind Brazil and Mexico in terms of both GDP and insurance and reinsurance premiums. A significant number of international insurers and reinsurers have local offices including Berkley, Chubb, Fairfax, Generali, IRB, Liberty, Mapfre, Munich Re, QBE, Sura, XL Catlin and Zurich, with many others also supporting the local market.

Nick Thomas, Senior Partner at Kennedys, said:

“Argentina is one of the largest insurance markets in the Latin American region, and there was a growing need from both existing and potential clients for us to have a full Kennedys presence available to them.

“Our Argentinian office will help secure Kennedys’ premiere position in the Latin America insurance market and adds to our considerable expertise across the region. I am very pleased to welcome Alberto and his team into the Kennedys family.”

Alex Guillamont, Head of Kennedys’ Latin America and the Caribbean practice said:

“Our combination of local, regional and global knowledge and expertise is valued greatly by our clients, who have influenced our decision in establishing a local presence in Buenos Aires.

The new office will now make us more accessible to international insurers and reinsurers operating in Argentina.”

Alberto Bunge said:

“We are very much looking forward to becoming part of Kennedys, as it will provide us with a competitive advantage through the knowledge and expertise we can draw on from its global network for the benefit of our clients. We have already received a lot of positive messages from clients who are equally excited about this development.”

The Argentina office will be located at: Av. Cordoba 817 piso 8° oficina “16” – C1054AAI, Buenos Aires.

This is the latest in a long line of global developments, including office openings this year announced in Bangkok, Bermuda, Melbourne, Mexico City and Paris.

Earlier this year Kennedys announced the completion of its merger with leading US insurance law firm Carroll McNulty & Kull, creating a global insurance practice; and in September completed a merger with UK-based commercial litigation specialists berg, which strengthened Kennedys’ global commercial litigation practice.

 

 

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2018 Miami Latin American Claims (Re)Insurance Forum

Forum_image Downtown Miami

Three days of in-depth discussion on current topical issues and trends of the (Re)insurance market, with (re)insurers experts and top industry speakers

  • WHEN:      June 11th – 14th, 2018
  • WHERE:   SLS Brickell Hotel in Miami, Florida

Kennedys and QLDG are pleased to announce the 4th edition of the annual Miami / Latin American Claims (Re) Insurance Forum, a proven successful event for career advancement and networking. It will be held in Miami from June 11th (Evening Cocktail) to June 14th 2018, at the new SLS Brickell hotel.

As in previous years, the Forum will bring together key International and Latin American industry experts who will be analyzing top claims issues and developments in Latin America & the Caribbean. Topics and case studies are carefully chosen based on current affairs and the feedback received by professionals from the (re)insurance industry.

The recent impact on construction, property, energy and marine claims of the cat events in Peru, Mexico, Puerto Rico and the rest of the Caribbean will feature significantly, as well as the latest on cyber, insurtech, D&O and surety issues. The full program for 2018 will be available soon.

Last edition’s speakers and participants included regional and international representatives from the following companies: AIG, AGCS, Aspen Re, Austral Re, AXIS Re, Chubb, Everest Re, FM Global, Generali, IRB Brazil, Liberty, Munich Re, QBE, Rimac, Scor, Starr, Sura, Swiss Re, Talbot, TransRe, and Zurich among others including several Lloyd’s syndicates and underwriting agents.

As a novelty simultaneous translation in Spanish and English will be available to both, speakers and delegates.

Thank you to Advanta, Rimac, RTS and TransRe for having confirmed their sponsorship. For additional sponsorship and speaker opportunities please contact us.

This is an exclusive event, attendance is by invitation only, as places are limited. Registration is already open.

TO REGISTER CLICK HERE using the code: FORUM2018

For information about the Forum, additional sponsorship and speaker opportunities please contact us:

Juan E. Lopez-Santini: jlopez@qldg.com

Alex Guillamont: alex.guillamont@kennedyslaw.com

Hilda Welcker: hilda.welcker@kennedyslaw.com

 You can check the Attendance list for 2017 edition here: ATTENDEE LIST2017

Sponsors:

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Next Women in (Re)Insurance event

 

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Women in reinsurance inv post nov 2017

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The fallout from Lava Jato

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The Lava Jato money-laundering scandal has caused deep reverberations throughout the insurance industry. Alex Guillamont and Anna Weiss of Kennedys discuss its implications.

What has been the fallout from the scandal and the effect on the insurance industry?

Lava Jato has caused deep reverberations throughout the insurance industry in Brazil, particularly in surety and financial lines. However, the impact of Lava Jato does not end in Brazil, as its effects are being felt throughout Latin America.

The scandal also resulted in the expansion of the powers of the Brazilian administrative authorities, allowing them to impose more severe penalties on companies that are not complying with the relevant regulations; presenting a new risk of exposure that insurers must take into consideration.

Another important effect of Lava Jato was the Brazilian Congress’ approval of the Anticorruption Law, effective on 28 January 2014. The intention of this law is to fill some gaps in the existing law; creating a specific law imposing liability on corporations for corrupt acts committed by their employees or agents. Previously, only individuals could be punished for such violations.

As a consequence of Lava Jato, politicians, and high-level directors of Brazil’s largest companies are being prosecuted and receiving jail sentences for the first time in the country’s history.

One of the biggest questions presented to claims adjusters is whether insurers should pay the defence costs of many directors, officers, and managers implicated in the corruption scandal—information gathered mostly from these plea bargain agreements. Each case will depend on the specific allegations made against the insured, the specific D&O policy wording, and how any admissions by the insured are phrased.

These questions are far from being solved and further complicating the situation are the conflicting positions that come from the complex re/insurance structures backing the majority of large policies.

Thus, more than ever, re/insurers need to review their wording and consider whether specific clauses for the kinds of situations detailed above should be covered.

What has been the effect on the construction industry?

Before Lava Jato, the Brazilian economy enjoyed an accelerated growth in the construction market; it was full of large-scale programmes such as power plants, hydroelectric dams, oil wells, and projects for the World Cup and the Olympics. However, in 2015 a financial crisis gripped Brazil that continues to this day.

In the midst of this crisis, Lava Jato revealed that the company’s biggest contractors were complicit in the largest corruption scheme in the country’s history. Odebrecht admitted it paid US$788 million in bribes to win contracts in 12 countries. This naturally aggravated the impact of the economic crisis on those companies, which had to sell assets, fire many employees, and in some extreme cases, declare bankruptcy. Peru and Colombia have banned Odebrecht from bidding on new contracts.

Several construction companies have been trying to exculpate themselves of Lava Jato by actively collaborating with the investigation and working to create a new business environment, but the outcomes of Lava Jato and the attempts to create this change of mentality to the business culture are forward-looking measures that have yet to produce any immediate results.

In the midst of the political and economic crisis that is gripping Brazil, there has been no discussion on the real necessity to improve infrastructure in all areas of Brazil. It is believed that the government will soon have lucrative opportunities to tender and the expectation is that new players in the construction sector will step into the vacuum left by Lava Jato, especially from China.

What will this mean for insurers in the country?

It is not clear when the government will resume its investment in the different sectors. Until then, construction and engineering insurance will suffer the impact felt by their clients and will have to consider how to reinvent themselves.

However, what represents a loss of opportunity for the pure construction insurance sector, represents a large opportunity for the financial lines and surety sectors. The underwriters that are dealing with these lines of business need to be more active and consider all elements that can affect the risk of their clients.

What do insurers need to be aware of in relation to the scandal?

The takeaway for re/insurers from Lava Jato is that the relationship between the public and private sector needs to be fundamentally redefined and that corruption is a threat that must be combated relentlessly. How companies in Brazil, and in the rest of Latin America, will do that, is not yet clear.

Insurers need to assess their wordings and exclusions in order to avoid indemnifying losses arising out of fraudulent schemes. But perhaps more than that, a more active (as opposed to reactive) solution lies with insurers. Insurers should take steps to be aware of their client’s profile and business culture through a thorough due diligence and more direct interaction with the client.

Alex Guillamont is head of the Latin America and Caribbean practice at Kennedys. He can be contacted at: alex.guillamont@kennedyslaw.com

Anna Weiss is head of construction for Latin America and the Caribbean at Kennedys. She can be contacted at: anna.weiss@kennedyslaw.com

This interview was published by Intelligent Insurer on Nov 13 2017 (https://www.intelligentinsurer.com/news/the-fallout-from-lava-jato-13866) and in the FIDES Day 1 Newsletter.

Isadora Talamo and Javier Vijil, both from Kennedys also contributed with the content of this interview.

 

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