Thank you all! Just 5 seats left for the 2018 Miami Latin American Claims (Re) Insurance Forum

 

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QLDG and Kennedys CMKwant to give the warmest thanks to those of you that have already signed up for the 2018 Miami Latin American Claims (Re)Insurance Forum.  More than 180 delegates have registered,with over 50% of those coming from carriers and reinsurance brokers.

Only 5 seats remain, which are being reserved for carriers on a strict first come, first served basis.

As always, special thanks to our 2018 sponsors Advanta, Envista Forensics, Rimac, RTS International Loss Adjusters, Sedgwick, Thornton Tomasetti, TransRe and the Welcome Cocktail sponsor IRB Brasil RE

You can find the Programme here2018 Claims Forum Programme

TO REGISTER CLICK HERE using the code: FORUM2018

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

For information about the Forum, please contact:

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

Alex Guillamont: alex.guillamont@kennedyscmk.com

Hilda Welcker: hilda.welcker@kennedyscmk.com

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Upcoming Women in (Re)Insurance networking event

Women in reinsurance post May 2018

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Update: 2018 Miami Latin American Claims (Re)Insurance Forum

Forum_image Downtown Miami

The 4th edition of the annual Miami / Latin American Claims (Re) Insurance Forum is approaching. Organized by Kennedys CMK and QLDG, the Forum brings together key International and Latin American industry experts that will analyze top claims issues, trends, and developments in Latin America & the Caribbean. Topics and case studies have been carefully chosen based on current affairs and the feedback received by professionals from the (re)insurance industry.

You can find the Programme here: 2018 Claims Forum Programme

As a novelty, besides the participation of technical reinsurance brokers, simultaneous translation in Spanish and English will be available to both, speakers and delegates, and breakout sessions at the end of each day for those who would like to discuss further any of the topics of each day.

Many thanks to our sponsors Advanta, Envista Forensics, Rimac, RTS International Loss Adjusters, Sedgwick, Thornton Tomasetti, TransRe and the Welcome Cocktail sponsor IRB Brasil RE.

The Forum is a by invitation only event, places are limited and are selling out quickly.

TO REGISTER CLICK HERE using the code: FORUM2018

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

For information about the Forum, please contact:

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

Alex Guillamont: alex.guillamont@kennedyscmk.com

Hilda Welcker: hilda.welcker@kennedyscmk.com

 

Forum sponsors all

 

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Latin America – Regulatory Update

shutterstock_118384402 latam map

2017 was a notable year for the Latin American market, not only due to natural events that tested solvency and the ability to deliver on claims, but also because of regulatory developments in key markets. These are exciting times for the region, which is adopting higher and more competitive market standards and establishing trends set to continue into 2018 and beyond.

Argentina

The political upgrade in Argentina brought about significant improvements to the insurance industry. The market – the third in premium size after Brazil and Mexico – was opened up to international players following the passing of Resolution 40,613 in November 2016. The Resolution allows admitted reinsurers access to the insurance market, who are now able to directly accept risks ceded by local insurance companies without the need for local reinsurers in the middle as before.

 On 3 May 2017, when Resolution 40,422 came into effect, the market widened further with anincrease of the risk percentage that can now be ceded to admitted reinsurers by local insurance companies. In July 2017 it was hiked from 10% to 50% and will rise incrementally until it reaches the 75% limit in July 2019.

Resolution 40,422 also had an important impact on the local market. The minimum capital requirements for local insurers and reinsurers licensed to operate in reinsurance rose from ARS300 million (c. US$15 million) to ARS350 million (c. US$17 million). This new prerequisite challenged the solvency of the local market and many insurance companies decided to file a reconversion plan (Plan de Reconversión) to meet the new demands. These plans included mergers, transfers of business and settlement agreements.

These changes, however, have opened up new opportunities for the international reinsurance market, especially taking into account the extensive infrastructure projects that President Macri has promised to complete in 2018.

 Brazil

The trend started by Argentina reverberated in Brazil. By the end of 2017 the country had endedrestrictions on risk transfer operations involving companies in the same financial group. The minimal compulsory retention of local reinsurers was also repealed.

Resolution CNSP 353/2017 eliminated the maximum percentage of risk cessions allowed within the same economic group, which was formerly set at 30% and was expected to increase to 75% in 2020. Under the new regime, intragroup reinsurance and retrocession transactions are allowed with no restrictions. As long as the Superintendence of Private Insurance (SUSEP) is notified about the risk transfer, the cedant reports the instances of risk concentration in a single occasionalor admittedreinsurer. Further, the auditing departments of local insurers and SUSEP are allowed to verify that an effective risk transfer took place, under balanced competitive terms. SUSEP is therefore not letting go entirely just yet.

Similarly, the Resolution alsoended the requirement of compulsory cession to localreinsurers and the percentage limitations previously imposed. However, direct insurers will still be required to offer the local market at least 40% of its reinsurance cessionon each automatic or facultative contract, but only be required to bind the risk with localreinsurers if they match the terms of the international market. The Resolution also establishes that unfair practices will invalidate the reinsurance contract and the cedant may be subject to penalties to be determined by SUSEP.

 Another development that may have an important impact on the activity of admittedreinsurers in Brazil is Ruling 62/2017 issued by the Brazilian tax authority (Receita Federal). The Ruling established that the activities carried out by a representative office of an admittedreinsurer are equivalent to the activities of a localreinsurer for the purposes of corporate income tax of 45%, 11 percentage points higher than the previous 34% rate that admitted reinsurers enjoyed. Although Ruling 62/2017 is already applicable, meetings between the Receita and the Federação Nacional das Empresas de Resseguros-FENABER are taking place to try and find an appropriate tax regime that both can live with[1].

 With these important changes, the current administration is leaving behind a decades long trend of very slow and protectionist opening and now seems keen to truly promote competition between international and local carriers.

Panama

This year new regulations are expected to be passed in Panama that will affect foreign reinsurers and reinsurance brokers doing business in this vibrant jurisdiction. In January 2018, the Superintendence of Insurance issued a draft regulation that will repeal Agreement No 4 of 2012 that regulates the registration of reinsurers and reinsurance brokers not established in Panama. The draft was under consultation with the industry until 27 January 2018 but the final wording and date of implementation is yet to be announced.

Some of the important changes expected from the new regulation include a double rating requirement for foreign reinsurers, and the imposition of a 60 day timeframe to file the operating license renewal application. If the double rating requirement is approved it may limit access to the Panamanian insurance market for some foreign players.

For reinsurance brokers, on the other hand, the new regulation will require issuance of a US$250,000 bond on behalf of the Superintendence of Insurance of Panama in case of any penalty imposed for breach of the broker’s obligations. Under the current regime, the obligation is to purchase a policy to cover errors and omissions with an indemnity limit of at least US$150,000.

Peru

Towards the end of 2017, Peru passed a new regulation[2]establishing guidelines and limitations to local insurance companies ceding risk in outward reinsurance and when providing cover as co-insurers.

One of the most relevant changes resulting from this new regulation is the rise of the ratings that non-admitted foreign reinsurers must meet in order to underwrite business from Peruvian cedants.

Although there is still no mandatory registration, foreign reinsurers are required to hold the minimum required rating[3]. In practice, local cedants tend to prefer ceding risk to reinsurers already registered with the regulator to facilitate their reporting obligations.

Another important change incorporated by this new regulation is that in cases of pure fronting with 100% of the risk ceded, the parties can agree that the payment of claims indemnities will be owed by the fronting company only after the funds have been received from the reinsurer. This last provision is already raising some eyebrows of cedants and reinsurers alike, and may result in risk managers having an even keener interest in knowing their reinsurers.

By Alex Guillamont, Head of Latin American and Caribbean practice for Kennedys CMK and Lorena Avila, Foreign Legal Consultant for Kennedys CMK.

[1]Admitted reinsurers would also be subject to social security contributions at a rate of 4.65% on gross premiums less claims paid Programa de Integração Social (PIS) and Contribuição para Financiamento da Seguridade Social (COFINS).

[2]Resolution SBS 4706-2017.

[3]Under the new rules, acceptable ratings are: Standard & Poor’s BBB; Moody’s Baa2; Fitch Ratings BBB and AM Best B+.

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Save the Date: 2018 Advanta Business Cocktail

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It’s almost that time of the year again where a relaxing and pleasing evening is set for you to enjoy.  Like in past occasions, Advanta is delighted to invite you to its 2018 Business Cocktail, taking place within the “2018 Miami Latin American Claims (Re) Insurance Forum” week. Save the date and accompany Advanta on Tuesday, June 12 for drinks and O’devours in what will be a laid back, fun ambiance. Be on the lookout!  Further details on venue soon to be delivered.

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New Regulation on Reinsurance and Coinsurance in Peru

Machu Picchu In Peru

Despite the constant political noise, Peru’s economy has stayed afloat in economic indicators and rankings. The last couple of decades have witnessed Peru surface as a healthy economy and investment haven. The Peruvian insurance industry has also grown steadily throughout the last decade at a two-digit rate. And there is room for more growth, as insurance penetration is still low compared to other countries in the region.

Gross written premium reached US$3bn by the end of 2017, representing 1.6% of the nation’s GDP. In a country where growth is expected to speed up in the coming years, supported by global demand for minerals and local infrastructure projects, business opportunities for (re)insurance may arise. Premium growth of 3% is expected for 2018.

The Peruvian insurance market is highly concentrated. Two local carriers (Rímac and Pacífico) have more than 50% of market share. Nevertheless, global insurers are entering the market (Chubb, Liberty, Fosun, HDI), betting on future opportunities and possibilities of growth, considering the low penetration of insurance products in the country.

Global reinsurers may also tap into opportunities in the Peruvian market by underwriting reinsurance business with Peruvian cedants and/or using them for fronting. Peru has a friendly business environment generally and regulation towards non-domiciled international reinsurers is uncomplicated.

In December 2017, the Peruvian insurance regulator (SBS) issued Resolution 4706-2017, a new Regulation applicable to insurers entering into reinsurance and coinsurance operations. This regulation will enter into force in June 2018.

At its core, said Regulation establishes guidelines and limitations for Peruvian carriers in order to accept and cede risks in reinsurance, as well as for providing coverage as co-insurers. It also introduces financial reinsurance in the Peruvian market and establishes an exception to the privity of contract rule between insurance and reinsurance.

A summary of the Regulation’s relevant aspect follows:

Who May Underwrite Reinsurance Business With Peruvian Cedants?
Reinsurers who comply with at least one of the following requirements:
A. Establishment in Peru;
B. Registration before the SBS;
C. Holding ratings of BBB by S&P, Baa2 by Moody’s, BBB by Fitch or B+ by AM Best; or,
D. Holding an express authorization granted by the SBS to underwrite a specific reinsurance contract, requested by a local cedant.

Disregarding special case-to-case authorization referred to in D, foreign reinsurers wishing to write reinsurance business with cedants will have to either register before the SBS or hold the minimum required rating or better. While it may be easier for foreign reinsures to ‘just hold’ the required rating, local cedants tend to opt to buy reinsurance from registered reinsurers as this eases their reporting duties before the regulator.

To register as foreign reinsurer, a local representative must be appointed to keep records of reinsurance contracts written with local cedants and updated documentation related to reinsurance underwritten. In addition, registered foreign reinsurers will have to file the following information before the regulator: (i) List of reinsurance contracts written during the previous calendar year, (ii) audited financial statements, and, (iii) latest rating granted by one of the authorised rating agencies.

How is financial reinsurance regulated?
The Regulation introduces Financial Reinsurance to the Peruvian market, and defines finite reinsurance as the reinsurance contract by which the cedant transfers, within previously established limits, the total value of their technical obligations arising out of the loss ratio of a given policy portfolio. As such, there is a transfer of the underwriting risk (uncertainty in respect of the quantum of the claims to be paid) and temporal risk (uncertainty on the date in which the claims will be paid).

Local carriers will be allowed to contract “fin re” by the regulator on a case-to-case basis given that reinsurers hold ratings of -or better than- AA by S&P, Aa2 by Moody’s, AA by Fitch or A+ by AM Best.

If authorisation is granted, the regulator will monitor the performance of the contract with the power to order its termination if it is deemed that the parties are not compliant with the Regulation or any other applicable norms.

Exception to Privity of Contract
When a local insurer acts as fronting, ceding 100% of the insured risk to reinsurer(s), the parties (insured, cedant and reinsurer) may convene that payment by the cedant for a specific loss or claim shall be granted only after it has received funds from the reinsurer. For such exemption to apply, a clause with the parties’ agreement and their duties in case of loss must be incorporated in the insurance policy and reinsurance contract. This will suck reinsurers into local disputes when coverage issues arise, effectively blurring the traditional legal and commercial separation of roles.

Coinsurance Update
The Regulation has formalised some of the established market practices. Peruvian insurers may coinsure risks provided that the insured has expressly agreed to it in the policy, which must be signed by all coinsurers and their participation in the risk must be clearly shown in the policy. In such cases, a lead coinsurer may be appointed to issue the policy and act on behalf of all coinsurers with the insured. As part of their duties, the lead coinsurer will collect the premium and distribute it among coinsurers and in case of any loss will collect the proportional coverage amounts from coinsurers and pay the loss to the insured.

The Regulation also allows the lead coinsurer to pay the loss in full and then collect the respective quota from coinsurers, if expressly stated in the policy.

Marco Rivera Noya, Partner at Kennedys in Peru
Alonso Barreda, Associate at Kennedys in Peru

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Upcoming Miami Seminar: Consulting Engineering Services in Latin America – Managing the local regulations and Idiosyncrasies.

Overhead view of construction workers and engineers at construction site

Please join us on next Tuesday April 17 at Novecento Brickell where Gino Valderrama, District Manager at Rimkus Consulting Group, Inc will be speaking about the working environment and challenges for engineers from USA working in Latin America, the issues with logistics and dealing with local regulations, codes and other idiosyncrasies of each country to investigate and prepare reports for their clients. Several case studies will be highlighted to demonstrate the potential pitfalls normally encountered.

Gino Valderrama

Mr Valderrama is a licensed Professional Engineer with more than twenty-six years of diversified mechanical engineering design, project management and consulting experience. He completed his BSME from Florida International University in 1991 and his J.D. in 1997 at The University of Miami.  Professional experience includes his role as Vice President and Operations Manager for the Miami, Caribbean and Latin American Division of T.Y. Lin International for over 13 years.  He has over 26 years of experience in all aspects of engineering and construction, dealing with issues of Civil, Structural, MEP and Fire Protection. His experience encompasses a broad range of capabilities including project management, design of plumbing, fire protection, life safety systems, heating, ventilation and air conditioning systems, computer modeling, analysis, design and life cycle cost analysis.  Responsibilities have included general office management, project management and design of complex building facilities.

Mr. Valderrama was born in La Punta Peru and migrated to Miami in 1976.  He attended Columbus High School in Miami.  He has been married to Conchy Valderrama a Mechanical Engineer for thirty one years and has a twenty two year old daughter Isabella a teacher.

Date: April 17, 2018

Time:

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: April 16, 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

 

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