Palestra apresentada por Carlos Varela no 6º Encontro de Resseguro do Rio de Janeiro, realizado nos dias 5 e 6 de abril de 2017, no hotel Sofitel Copacabana.
3. 1. Latin America socio-economic overview.
2. Colombian insurance market.
3. Reinsurance regulation in Colombia.
4. What Colombian insurers expect from reinsurers.
5. What reinsurers can expect from Colombian insurance
market.
6. Final remarks.
Summary
7. 5%
5%
6%
6%
7%
7%
9%
0% 2% 4% 6% 8% 10%
Brazil
Mexico
Peru
Paraguay
Venezuela, RB
Argentina
Colombia
Unemployment rate 2014:
Socio-economic overview
Unemployment rate*:
0
2
4
6
8
10
12
14
enero
abril
julio
octubre
enero
abril
julio
octubre
enero
abril
julio
octubre
enero
abril
julio
octubre
enero
abril
julio
octubre
2012 2013 2014 2015 2016 201
7
Unemployment%
Colombia Brazil
Source: World Bank. DANE. IBGE. Non-stationary unemployment series for Brazil
18. Nationality of insurance companies capital in Colombia
Nationality
Colombia (14)
Private (12)
Public (2)
Abroad (25)
U.S. (10)
E.U. (12)
Other (3)
Blend (7)
Source: Fasecolda.
19. Ratio of capital available to guarantee solvency
0
0,5
1
1,5
2
2,5
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Total Life insurance companies Non life insurance companies
Inclusion of market risk in the
capital requirement
1,8
Average capital
available to prove
solvency by
industry.
Source Superintendencia Financiera de Colombia. Fasecolda
20. Ceded premiums
Source: Latino Insurance. Terra Brasis. Fasecolda
Ceded premiums in Latam (in US$ billions-2015):
$2,5
$2,0
$1,7
$1,1
$0,7
$0,4
$0,3
$0,0
$0,5
$1,0
$1,5
$2,0
$2,5
$3,0
Mexico Brazil Colombia Argentina Ecuador Chile Peru
US$Billions
21. Ceded premiums
20% 20% 20%
17% 17%
18%
19%
37% 37% 36% 36%
34%
36% 37%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2010 2011 2012 2013 2014 2015 2016
Industry Non life
Ceded premiums as % underwritten premiums:
SourceSuperintendencia Financiera de Colombia. Fasecolda.
22. Ceded premiums
7%
35%
36%
41%
48%
56%
64%
67%
75%
79%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Auto insurance
Other
Transportation
Liabilities
Bond insurance
Employment practices
Fire
Earthquake
Engineering
Trade credit insurance
5%
27%
42%
50%
50%
51%
55%
60%
72%
78%
0% 20% 40% 60% 80% 100%
Auto insurance
Transportation
Liabilities
Other
Employment practices
Bond insurance
Earthquake
Fire
Trade credit insurance
Engineering
2010 2016
Ceded premiums as % underwritten premiums:
Source: Superintendencia Financiera de Colombia. Fasecolda.
23. Ceded premium: Brazil and Colombia for some non-life
lines of business.
5%
28%
38%
81%
58%
52%
0,9%
23%
39%
23%
0% 20% 40% 60% 80% 100%
Auto insurance
Transportation
Liabilities
Trade credit insurance
Property
Bond insurance
Brasil Colombia
2014 2016
Ceded premiums as % underwritten premiums:
Source: Superintendencia Financiera de Colombia. Superintendencia de Seguros Privados de Brasil. Fasecolda.
7%
36%
41%
79%
66%
48%
1%
23%
37%
25%
0% 20% 40% 60% 80% 100%
Auto insurance
Transportation
Liabilities
Trade credit insurance
Property
Bond insurance
Brasil Colombia
24. XoL reinsurance cost as percentage of premiums
3,7%
3,4%
3,2%
2,9%
3,1%
2,7%
5,4%
5,0% 4,9% 5,0%
4,8%
4,0%
0%
1%
2%
3%
4%
5%
6%
2010 2011 2012 2013 2014 2015
Total Non-life
XoL cost as % underwritten premiums
Source: Superintendencia Financiera de Colombia. Elaboración: Fasecolda.
25. 1%
1%
2%
3%
5%
6%
6%
9%
14%
19%
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%
Auto insurance
Trade credit insurance
Other
Bond insurance
Liabilities
Engineering
Transporting
Fire
Employment practices
Earthquake
XoL cost as % underwritten premiums:
Source: Superintendencia Financiera de Colombia. Elaboración: Fasecolda.
XoL reinsurance cost as percentage of premiums
26. Reinsurance companies in Colombia
49
24
18
15
10 9 8 8
6 5 5 4 4
2 2 2 2 2 2 2 2 1 1 1 1 1 1 1 1 1 1 1 1
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0
10
20
30
40
50
60
U.S.A.
INGLATERRA
BERMUDA
SUIZA
ALEMANIA
IRLANDA
FRANCIA
REINOUNIDO
MÉXICO
ESPAÑA
BRASIL
LUXEMBURGO
PANAMÁ
INDIA
LIECHTENSTEIN
BÉLGICA
JAPON
PERÚ
COREA
ISLASCAIMÁN
ITALIA
HOLANDA
AUSTRIA
CANADA
ESLOVENIA
ESCOCIA
COSTARICA
SUECIA
NUEVAZELANDA
TURQUIA
CURAZAO
GUERNSEY
PUERTORICO
Número de compañías Porcentaje acumulativo
70% of
reinsurance
industry comes
from 7 countries
203
Reinsurance
companies
registered in
REACOEX
14 Offices in the
country
Source: Superintendencia Financiera de Colombia. Fasecolda.
27. Reinsurance companies rating
60
31
47
2
8
1
8
20
2 1 1 1 2 1 1
3 4
0
10
20
30
40
50
60
70
A A- A + A u A++ A3 AA AA- AA+ Aaa Au B+ B++ B++u Baa3 BBB BBB+
Standard&Poor´s, A.M Best, Fitch Ibca, Moodys.
Source: Superintendencia Financiera de Colombia. Elaboración: Fasecolda.
29. REACOEX, RAIMAT, RAISAX
REACOEX
RAIMAT
RAISAX
It is a registry of foreign
reinsurers that meet
capital, solvency and
qualification
requirements, necessary
to operate in Colombia
Registration of foreign insurers
that offer insurance for maritime
transport, international
commercial aviation and launch
and space transportation.
Registration of foreign insurers that offer
agricultural insurance.
30. REACOEX
Agency Minimum Rating
Standard & Poor´s BBB-
A.M. Best B+
Fitch BBB-
Moody´s Baa3
REACOEX registry does not relieve insurers to assess its reinsurers.
Insurers must evaluate its reinsurers' financial stability, the opportunity in
the payment of its obligations and its knowledge of the line of business.
31. IFRS, Solvency requirements and reinsurance
Solvency
regime
Assets
Primary capital
Secondary capital
Capital Requirement
Underwriting risk
Asset Risk
Market Risk
IV
account receivable from reinsurance
is include in the asset risk
calculation.
32. Insurer’s board of directors and the reinsurance program
is to define, approve and follow up on the insurer risk
retention policies and reinsurance contracting scheme.
One of the Board of Directors responsibilities. The risk
retention policies must have at least:
1. Diversification guidelines for reinsurers
considered within the reinsurance program.
2. The financial ratings of the reinsurers that the insurer
will accept, in force at the date of the reinsurance
contract.
33. Insurer’s board of directors and the reinsurance program
is to define, approve and follow up on the insurer risk
retention policies and reinsurance contracting scheme.
One of the Board of Directors responsibilities. The risk
retention policies must have at least:
3.
The variables that will be required by the insurer to evaluate
the financial strength of the reinsurer, such as investment
returns, level and access to capital, sources and liquidity
level and its participation in total investments, Solvency,
level of technical reserves and their composition.
34. Insurer’s board of directors and the reinsurance program
is to define, approve and follow up on the insurer risk
retention policies and reinsurance contracting
scheme. One of the Board of Directors
responsibilities. The risk retention policies must have
at least:
4. The technical criteria with which reinsurers were
chosen
5. Other relevant characteristics such as the follow-up of
claims, loss ratios, gross and net premiums behavior,
expenses behavior, hiring criteria of reinsurance
brokers, etc.
35. The latest tax reform and
the old retention over ceded premiums
The most recent tax reform established a 1%
withholding tax on premiums ceded in reinsurance.
Since 1991 insurers must retain a percentage of the
ceded premiums.
37. The basic qualifiers
a. Financial strength (adequate rating, solvency,
loss ratio, technical reserves, etc.)
b. Expertise and experience in the business (in
the line of business).
c. Knowledge of the country’s legal and
regulatory framework. A lot of things are
changing.
d. Capacity.
These basic qualifiers are not enough
38. Elements that add value
1. Know-How. Knowledge transfer for a better
business performance.
2. Additional services: The reinsurer as a source of
ideas to improve innovation. Its experience in
other markets may help the develop local
products.
3. Fast response, agile and flexible interaction.
39. Partnership
i. Building trust for a long-term relationship.
ii. Win-Win contractual agreements.
iii. Creating synergies to grow together.
43. • A highly competitive market.
• A regulatory environment that has strengthened companies'
equity.
• Human resource highly trained and knowledgeable about
the insurance business.
• A Supervisor concern about consumer protection and taking
actions with impact into the business.
Colombian insurance market. What to expect.
44. • An industry with a good interaction with the Supervisor and
Regulator.
• A Supervisor and regulator improving its technical skills.
• A financial market moving toward Insurtech world.
Insurance can not be an exception.
• IFRS, modifications to the investment, solvency and
technical reserves regimes.
• A lot of international players looking for establishing
operations of Insurance and Reinsurance.
Colombian insurance market. What to expect.
45. New technical reserves regimeReservasTécnicas
Riesgos en curso
Prima no
Devengada
Insuficiencia de
Primas
Matemática
Matemática
Insuficiencia de
Activos
Siniestros
Pendientes
Siniestros Avisados
Riesgos Laborales
Seguro Previsional
Siniestros Ocurridos
no Avisados
Enfermedad
Laboral
Riesgos
Catastróficos
Desviación de
Siniestralidad
X
X X
Reglamentado
o no requiere
reglamentación
Pendiente
Reglamentación
X
X
Contabilización de
las reservas
Actuario
Responsable
47. • Colombia has been experiencing profound social, economic
and political transformations.
• We believe that, despite enormous challenges, the country
will be strengthened and the insurance sector will do so.
• We invite you to know our country and our economy. There
are good business opportunities.