Hurricane Harvey: Keeping sight of Texas’ Prompt Payment of Claims Act

As the first major hurricane to make US landfall since 2005 and with a ferocity reminiscent of Katrina, Hurricane Harvey has impacted a wide segment of the property, construction, and energy (re)insurance market located within the coastal areas of southeast Texas, Houston and its surrounding counties, and the Gulf Coast. The early projections anticipate USD 40 – 50 billion in losses, and years of restoration.

In recent days, all associated with the (re)insurance market have closely followed the developments associated with Hurricane Harvey. As the first major hurricane to make US landfall since 2005 and with a ferocity reminiscent of Katrina, it will no doubt remain a focal point for the (re)insurance market in the weeks and months ahead.  As the market responds to the devastating damage caused by the hurricane, as well as the subsequent rainfall and flooding, the market should keep sight of the critical provisions of the Texas Insurance Code.  Texas has a “Prompt Payment of Claims Act” establishing specific limited periods of time to acknowledge receipt of a claim, begin the investigation, and request information.  The Act also limits the time insurers have to make claim decisions, and issue payments after an insurer determines it will pay the claim.  The Act obligates insurers to effectuate prompt, fair, and equitable settlements, and imposes penalties on insurers who run afoul of these provisions.  While a new law going into effect on September 1 moderates some of the penalties and provisions associated with weather-related claims, risks remain. As the market addresses the exposures covered by the broad scope of implicated policies, it will need to mindfully adhere, and document that adherence, with the proscribed practices to effectively handle the claims and minimize their extra-contractual risk.

Kennedys CMK is here with straightforward and supportive advice to assist the market with its good faith compliance with all applicable laws and implicated policies. Kennedys CMK has offices in Texas, Illinois, New York, New Jersey, Pennsylvania, and Florida.  In addition, Kennedys is available around the globe where our clients’ interests or policies may involve exposures arising from Hurricane Harvey.

Dan Sanders is a Partner in our Miami and Philadelphia offices and focuses on representing (re)insurance clients with the evaluation, negotiation, and litigation of multi-national (re)insurance disputes, and counsels clients on insurance coverage and good faith claim handling.

Daisy Khambatta is a partner in the Austin office and focuses on representing clients in all aspects of insurance and reinsurance – including claims counseling, litigation and arbitration, regulatory issues and government relations, and formation of captive insurers and risk retention groups.

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Upcoming PLUS SE Seminar in Miami International Management Liability: Claim Trends and Market Developments


The Professional Liability Underwriting Society, Chapter South East (PLUS SE) is hosting a panel discussion about the various aspects and latest developments in international Management Liability and how the future landscape will look like through the perspective of a broker, a claims adjuster, an underwriter and an attorney.

The focus will be on the trends appearing in the different industry sectors of buyers of Management Liability Insurance, including Directors & Officers.

Claims management topics will include the frequency and severity of claims.  The underwriting topics will include the soft-market/hard-market outlook for the next five years, and an overview of the fastest developing countries in terms of litigation.  The brokers’ topics will include the various Management Liability products and the regulations on same which vary by country.  The legal topics will include coverage litigation and claim defense in foreign jurisdictions.


Laura T. Sanchez, LLB PsDIns. CA, Claims Manager, Willis Towers Watson

Natalia Char, Head of Financial Lines & Financial Industry Leader, Willis Towers Watson

Kenia Delgado – Director, Dual Specialty Underwriters

Scott Mission – Pioneer Underwriters

Alex Guillamont – Head of Latin America and Caribbean, Kennedys

Date: August 30th 2017


12:30 pm – 1:00 pm Registration

 1:00 pm – 4:00 pm Seminar

4:00 pm – 6:00 pm Reception with food and drinks

Where: Conrad Hotel 1395 Brickell Ave, MIAMI, FL 33131


Members: $25                   Non-Members: $35

Register online now or download the event registration formsee you there!

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Highlights of the third annual Latin American Claims (re) Insurance Forum

The third annual Latin American Claims (re) Insurance Forum, held on 15-18 May 2017 hosted by Kennedys and QLDG at the Conrad in Miami, was attended by in excess of 170 delegates from around the globe.  The mix of delegates included as many as 50 industry-leading speakers from companies, including AIG, AGCS, Chubb, FM Global, Liberty, several Lloyd’s syndicates, Munich Re, QBE, Scor, Sura, Swiss Re, Talbot, Trans Re and Zurich. This year welcomed more cedents from the region, which provided greater insight into the local issues on the ground in various countries coupled with the larger international re-insurance perspective and how the two intertwine.

Forum 2017 full room 2

The conference opened with a discussion on major challenges and opportunities foreseen by carriers in Latin America in the next 5-10 years, with a panel consisting of presidents and SVP’s from the largest players in the local market. With technology identified as one of the key risks and also opportunities, further panels also focused on technology.

For example, one of the key risks we face on a global scale is cyber-crime, as was illustrated only days earlier with the Wannacry Ransomware attack, a cyber-attack that hit organizations in more than 100 countries within the span of 48 hours. More than 130,000 systems were compromised. This is one example of how cyber-attacks have recently become a real threat and nowadays are seen as one of the most profitable forms of crime in the world. There was therefore an essential cyber session about the main distinctions between crime/BBB and cyber. As Latin America and the Caribbean have the fastest growing Internet population in the world, but still lack domestic regulation and there is also a gap in terms of taking a coordinated response to cyber-attacks, this panel was especially thought provoking for those attending from the region and they summarized the main steps that should be followed when a breach is discovered. The panel also provided some examples of the consequences of a data breach, like fines imposed by regulators and shareholder derivative actions and they analyzed real cases of cyberattacks in the US. Some cases have already been scrutinized by the US Courts, and the decisions held so far can be used as a parameter to engage a legal discussion about the interpretations of Cyber wordings and, also, to support the move towards better policy wordings and products.

There was also a panel on some new developments in technology such as how drone usage presents unregulated risks and the risks associated with that. Additionally, there was a captivating and engaging panel on Insuretech, which gave us a peek into the future world of tomorrow by not only depicting technological advances in the insurance industry but the arising challenges that accompany them. Juxtaposing the agricultural and industrial revolutions, the Ai revolution, despite being in its infancy, proves to have the potential to change not only the face of insurance markets but also the wider world. Exemplified by Ai software that within a matter of seconds manages to underwrite risks and process claims, such advances strike with a double-edged sword. On the one hand, they offer faster, cost-efficient options devoid of human error, but this needs to be weighed against the other end of the scale, where such technological advances come at a cost as certain roles within centuries-old professions become obsolete to a certain extent. Ultimately, Insuretech ponders the question: on the balancing scale, does the price of progress outweigh its benefit?

Panelists also addressed catastrophic losses, which looked at all sorts of risks, including the recent riots in Mexico, for example, where lessons learned in the handling of the resulting losses, as well as related underwriting topics were discussed.  The practical side of The Forum also discussed pitfalls identified by claims handlers on losses at manufacturing concerns which ultimately ended up in arbitration tribunals.

The Forum also presented real case studies on complex property damage and time element scenarios prevalent in LatAm.  In a panel called “the Perfect Storm” panelists donned their umbrellas and raincoats to discuss what was perhaps the largest claim in LatAm during 2016.  The case discussed was a representative example of a major property loss which occurred at a critical time resulting in a very large property damage and time element exposure.  As in the movie of the same title, insurers and their appointed experts worked together to reinstate the affected operation in record time.  With the rapid development in the region, the risk of other “Perfect Storms” is always present.  Most lessons learned on that case apply to all losses.

The Forum closed with the annual discussion on construction risks in LATAM which sought to introduce concepts and products (such as professional indemnity insurance, decennial cover, latent defects insurance and the like) that are used elsewhere in the USA and in Europe, which should, in certain projects, be required and which may help to avoid some of the recurring problems encountered in the region. As always, significant discussion surrounded the problem of lack of design cover in high value complex projects, and lack of preparation at the outset such as the use of scale models. Other ways to improve pre-construction planning were discussed and this included Building Information Modelling (“BIM”) and how it could be used more in LATAM, and a healthy debate ensued regarding the benefits and the challenges of using BIM.

The final session on surety also gave delegates an insight into the way the “Seguro de Caución”, a new and relatively untested form of surety product in Mexico regulated by the Ley de Instituciones de Seguros y Fianzas, would operate in comparison to the traditional form of surety bond seen in Mexico. This was illustrated by analyzing the underwriting and claims position, using a case study of Line 12 of Mexico City’s Subway. In summary, the conclusion was that the underwriting process was substantially the same but the nature of the bond would change from being a conditional surety bond to an unconditional “on-demand” Seguro de Caución. The main goal of the Seguro de Caución being the immediate payment of the claim.

Finally, whether it was the engaging panels or the networking opportunities at lunch, coffees or cocktails, there was always a sense of positive energy about the future of the industry in Latin America that reverberated around the room. The save the date for the fourth annual Latin American Claims (re) Insurance Forum will be announced soon.

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AXIS Approved to Launch Lloyd’s Managing Agency


AXIS recently received regulatory approval from Lloyd’s, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) to launch its own Lloyd’s Managing Agency that will assume the management of the AXIS Syndicate 1686 from Asta Managing Agency Limited. This change will result in a newly formed organization – AXIS Managing Agency Limited.

This change will allow AXIS to more efficiently manage its Lloyd’s operations, take full advantage of Lloyd’s worldwide licenses and extensive distribution network, and eventually offer enhanced capabilities and capacity across all specialist classes that AXIS underwrites out of Lloyd’s.

The launch of the AXIS Managing Agency does not impact the way AXIS conducts business out of its Miami location. Your point of contact with AXIS remains the same, and it will continue to offer and provide the same services that are currently available to their partners.

AXIS is very excited to strengthen its direct relationship with Lloyd’s and looks forward to enhancing its capabilities in the future.

Please feel free to contact the AXIS Miami team with any questions regarding AXIS’ managing agency at Lloyd’s. AXIS appreciates its partners’ continued support of its efforts in the LAC market and looks forward to continuing its relationship as it expands.

More information can be found in the accompanying press release.

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Women in Insurance Event

Glass of Wine with The Ladies (2)

Insurance Professionals Miami is happy to share the details of the upcoming Women in Insurance Event which will be held on 15 August 2017 at Novecento in Brickell, which is hosted by the ladies of Hiscox, Helvetia, Brit, QBE and XL Catlin. Cassandra R Cole, PhD who is the Department Chair, Director of the Master of Science in Risk Management and Insurance Programme at Robert L Atkins, will be attending, in addition to the ladies in the insurance market in Miami who join together every quarter to network. This is a fantastic occasion to gather together and discuss the industry and enjoy a glass of wine. The last event which was held on the 25th of April 2017 was a huge success and well attended by the market. We heard from inspirational leaders in their field and how they juggle the role of running teams and how they found a balance in their personal life even during hard times. If you are a female professional in insurance in Miami, please come along and join them on 15 August. No RSVP is required.




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RSG Expands in Latin America with the Hiring of Pascal Alvarez

rsg logo


Ryan Specialty Group (RSG) is pleased to announce their first Latin American focused managing general underwriter, hiring the highly respected commercial insurance executive Pascal Alvarez to lead the charge.

Pascal Alvarez has joined RSG as President and CEO of the newly formed specialty financial lines managing general underwriter, Capital Bay Underwriting. Mr. Alvarez is responsible for all aspects of the business growing initially in Latin America and the Caribbean, focusing on D&O, Professional Indemnity and Crime. David Gonzalez has also joined Capital Bay Underwriting as Chief Underwriting Officer.

Patrick G. Ryan, Founder, Chairman and CEO of RSG, commented, “Pascal is a proven leader with keen senior executive leadership skills and a strong underwriting record. We’re excited to have Pascal join our family. With his many years of experience in the financial lines arena, including Financial Institutions, we are confident in Pascal deepening our expansion into Latin America and the Caribbean.”

On joining RSG, Mr. Alvarez said, “I am thrilled to join the RSG team where talent, underwriting expertise and excellent service are key differentiators. Capital Bay Underwriting focuses on world class specialty re/insurance products and services to customers in emerging markets with an initial concentration on financial lines in Latin America and the Caribbean. I look forward to spearheading our growth in this region and to become a top player in emerging markets and a leading contributor to the advancement of specialty markets in these territories. Further, I am delighted to be joined by David, a world class financial lines executive and leading underwriter.”

Capital Bay Underwriting will initially be located in Miami, Florida.

Pascal Alvarez can be reached at:, 305-902-7675

David Gonzalez can be reached at:, 786-853-2497

About Pascal Alvarez

Mr. Alvarez spent over 24 years in a variety of senior roles at a leading international insurance company in Latin America & the Caribbean and in Continental Europe. Most recently he served as Head of Commercial Insurance for Latin America and the Caribbean. Previously he was Financial Lines Head and Chief Underwriting Officer for the region. When in Europe, he worked for Financial Lines in various roles of increasing responsibility ultimately as Head of Financial Institutions for Continental Europe.

About David Gonzalez

Mr. Gonzalez spent over 12 years in a variety of senior roles in Financial Lines at a leading international insurance company in Latin America & the Caribbean. Most recently he was Regional Manager Financial Institutions, Management Liability and Crime, based in Miami. Prior to that, he held roles of increasing responsibility in Financial Lines based in Ecuador, Puerto Rico and Colombia.

Ryan Specialty Group, LLC

Ryan Specialty Group, LLC is an international specialty insurance organization which includes a wholesale brokerage firm and highly-specialized managing general underwriting companies designed specifically for agents, brokers and insurers.

This information was taken from Ryan Specialty Group website:

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Cuba, a newly emerging market?


On 17 December 2014, President Obama issued a presidential policy directive normalizing relations between the United States and Cuba in an effort to further engage and empower the Cuban people. However, the new US president is expected to announce his policy on Cuba shortly, which the press has ventured will continue ties with Cuba although with targeted freezing of trade with military-related business interests which, for the moment, should be of limited impact to the insurance / reinsurance sector in the island.

During 2015 and 2016, the United States Treasury Department’s Office of Foreign Assets Control (OFAC)[1] amended its regulations jointly with the US Department of Commerce. The most recent amendments took effect on 17 October 2016, when the Federal Register published the implementation of some policy measures, including two main adjustments related to professional research and banking. Currently, people subject to US jurisdiction are now permitted to travel to Cuba to attend or to organize professional meetings or conferences, granted they are not promoting tourism. A US bank[2] was granted authority to offer ATM cash withdrawals, with a pre-issued debit Mastercard, in Cuba.

In 2016, about 284,937 Americans visited Cuba, a 74% increase from the previous year. Many of those visiting did so under educational programs that allowed leisure time for exploring and traveling about the island. Additionally, a few US companies began operating in Cuba, i.e. airlines and other services industries related to civil aviation safety, cruise lines, agricultural interchanges, and communications.

The diplomatic rapprochement between the United States and Cuba to eliminate, or at least ease economic sanctions, may create an attractive niche for US carriers within the Cuban insurance market.

Insurance background in Cuba

In our two previous articles about Cuba[3], we discussed the structure of the Cuban insurance market.

Briefly, the Cuban insurance market is composed of two insurance companies: Empresa de Seguros Nacionales [National Insurance Company] (ESEN) and Seguros Internacionales de Cuba, S.A [Cuban International Insurance Company] (ESICUBA). Both companies are subsidiaries of the Caudal Group, supervised by the Ministerio de Finanzas y Precios [Financial and Pricing Ministry] (MFP); therefore, they fully respond to the state´s interests rather than the free markets. Their well-defined scope makes no competition between the two companies inexistent.

ESEN[4] was created under Resolution No. 858/78, on December 22nd 1978 with the purpose of developing insurance and reinsurance operations under both national and foreign currencies. ESEN provides insurance coverage for life, motor, and agricultural business.

ESICUBA[5] was founded on April 9th 1963, under the Financial Ministry’s Resolution No. 416. Its main objective is to secure and provide general insurance, reinsurance, recovery, and salvage services to the government´s assets and the interests of visiting foreign investors. ESICUBA has a London office, Anglo-Caribbean Insurance Agents Ltd., which acts as a liaison between Cuba and the international market.

The reinsurance business in Cuba

Only ESICUBA can negotiate and provide reinsurance coverage for risks located in Cuba. Every year, the board analyzes its retention capacity to determine the maximum insurance retention per business for the next year. ESICUBA negotiates reinsurance protection for all insurance over the maximum retention, i.e., for aviation, hotel construction, oil and gas, businesses, and factories, among others. In addition to placing facultative business with reinsurers abroad, ESICUBA has three reinsurance treaties: Marine, Catastrophic Reinsurance (CAT), and Non-Marine (NMA) for the risks that fall below the mentioned retention.

ESICUBA finds retrocession capacity both in Lloyd’s and non-US markets. Due to the economic sanctions and limitations enforced by the United States embargo against Cuba, none of these can be US companies, nor have a US citizen as acting CEO, except if they receive OFAC authorization first.

Recent investment projects in Cuba raise hopes of future projects. The arrival of new foreign investment in Cuba implies that demand for insurance, with international standards, will grow. The involvement of North American insurers, reinsurers, and brokers is becoming more attractive and vital. Two examples reflect this yet timid development.

The new port terminal in Mariel[6] Province, 25 miles west of Havana City, with capacity for large vessels, located inside the new special economic development zone of Mariel. Such project intends to encourage sustainable economic development by attracting foreign investment.

Beginning in 2011, deep water oil wells were drilled in Cuba’s jurisdictional waters. Union Cuba-Petróleo [State Cuban Oil Company] (CUPET), raises capital to expand projects in the Cuban Exclusive Economic Zone in the Gulf of Mexico. Within the last five years, large projects have been in development to access the oil reserves in the Straits of Florida. Several US salvage companies requested permission from OFAC to work with Cuban companies on devising emergency responses for potential oil spill clean-ups. Given the kind, size, and scope of the projects, this area should be considered for future agreements.

How can international carriers enter the Cuban market?

Cuban law seeks to protect the interests of its national insurance companies from foreign competition. For example, Article 39 of the Decreto Ley 313[7]– “De la Zona Especial de Desarrollo Mariel,” (special development zone of Mariel) states that “Cuban insurers, under international competitive conditions, will have the right of first refusal. If this is not possible, the Superintendence of Insurance allows insurance with foreign entities. The regulation for granting the authorisation is issued by the Finance and Prices Ministry”.

Similar language appears in Article 50.1 of the Ley 118[8] “Para la inversión extranjera” (for foreign investment) which states that “Cuban insurers, under international competitive conditions, will have the right of first refusal.”

Any company that wants to act as a broker, insurer, or reinsurer must apply for the Cuban Superintendence’s authorization. Due to the US embargo, US companies and entities where the CEO is a US citizen must first apply for an OFAC license. Once the OFAC license is granted, the approval procedure is the same for all worldwide companies. So far, no foreign insurer or reinsurer has enter the Cuban market.

Review of the Foreign Investment Law and experience with Cuban entities from other sectors reveal three main entry points into the Cuban market:

  1. Join venture with a Cuban entity (Art. 14), the Asociación Económica Internacional [international economic association of mix capital]. This modality requires a joint venture between one or more national investors, and one or more foreigner investors. The new legal entity is different from the parties and adopts the category of Sociedad Anónima [Corporation]. The law does not regulate the proportion each party will retain, but normally the state keeps 51%. However, lately this has changed, allowing the foreign investors to retain more than the typical minority share. This modality constitutes 50% of all current investments in Cuba.
  2. International economic association contract (Art. 15), under IEA format, the foreign investors has the leading role and are allowed to exercise control with a domestic investor assuming the following role. Monetarily speaking, each party is expected to contribute towards running operations of its share of the new business. This form of association is used mainly for hotel administration, production, or professional service advice (i.e. audit and financial advice; some business administration has been present but brokers has not), and represents 45% of all current investments.
  3. Local representation office, representing the remaining 5% of all current investments, are created through Foreign Capital or Mix Capital companies. Because this modality is reserved to marketing products and services of parent companies abroad, it has a non-productive commercial purpose; and therefore, the activities it can undertake are It cannot import or export, carry out wholesale nor retail commerce or service transactions, or transport goods in Cuban territory. Licenses are granted for specific purposes.

Those willing to set up camp in Cuba, need to comply with the above. However, for those not yet ready to physically disembark, there is another way of doing business in the Cuban market, as an ESICUBA direct reinsurer or broker. Currently there is no reinsurer or broker with U.S. capital in such list but nothing prevents them from doing so if they comply with the Superintendence of Insurance requirements (including OFAC licence); whereupon the Finance and Prices Ministry makes the decision to grant permission based on economic, practical, and political considerations.

So the process can take time but it is certainty available alike for the purpose to enter into the local market.

While Cuban laws try to make no distinction between reinsurers and brokers, given that the Cuban government owns the only two preoperative insurance companies, it is unlikely that a direct foreign carrier would be accepted any time soon, as it would be considered competition.

Hiring regulations would also present an obstacle for foreign companies entering the Cuban market. Article 30.1 of Ley 118 stipulates that all workers of any of the modalities mentioned above must be permanent Cuban residents and hired through a national employment agency. However, during the approval process and following local legal regulations, an exemption can be granted to hire all employees directly.

Despite ongoing progress in the relations between Cuba and United States, feelings of uncertainty about the future linger because the new US presidential administration has yet to present its policy on Cuba. However, as of today, all the concessions granted to airlines, cruises lines, and other businesses under the Obama administration are still in effect, potentially signalling the continuation of Obama’s economic openness policy.









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