Mexico Day 2016 - Insurance Roundtable Summary
The Embassy of Mexico in the UK and The Mexican Chamber of Commerce in Great Britain (MexCC) collaborated in the hosting of Mexico Day 2016 in London last week.
Attended by Nick Bacon, Chief Distribution & Operations Officer of Probitas 1492, the event saw high level officials from Mexico and Britain participating in a set of informative and provocative panels with top representatives from private and public sectors.
Speakers included the Rt. Hon. Lord Mayor Mountevans, Baroness Jane Bonham Carter, Irene Mía, Global Editor Director of Economist Intelligence Unit, and Dionisio Arturo Pérez-Jácome Friscione, Representative of Mexico to The Organisation for Economic Co-operation and Development (OECD).
During an interview conducted by Mía, Pérez-Jácome informed the congress of several key strategies the OECD is currently undertaking in order to increase productivity in Mexico. These included tackling poverty, undertaking a number of PPP projects (of which there are already six large projects in the pipeline), attacking climate change, and boosting education. The OECD is also planning gender equality, inclusiveness and diversity programmes, such as the ‘Empowerment of Women’ study. The challenge remains, however, the ‘implementation’ of such reforms, said Pérez-Jácome.
Following this informative interview, the congress parted into four distinct Roundtable discussions: Energy, FinTech, Food & Drink and Insurance. Nick Bacon of Probitas contributed to the latter discussion, which included speakers from ASEA, AMIS, Lloyd’s and Axa, and moderated by Juan Pablo Sainz of law firm Nader Hayaux & Goebel.
Whilst Mexico is the second largest insurance market in Latin America, it has one of the lowest penetration rates in the region. Structural reforms in the infrastructure and energy sectors have opened the market to specialised insurance lines of business. The Roundtable at Mexico Day allowed key figures in the industry to discuss and debate the details of this, to learn about the Mexican insurance industry and the effects of the new regulations in the market.
Recaredo Arias, CEO of AMIS, began the discussion with a comprehensive and encouraging overview of the Mexican insurance market, which was agreeably received by the other participants. A couple of challenges remain, however, such as the soft market which has seen more P&C business coming in but at lower prices; and while regulation is viewed as a good thing, more stringent data requirements are a new challenge which needs to be tackled.
David Franco demonstrated Lloyd’s full support of the Mexican market. In January 2015, Lloyd’s set up an office in Mexico, attracted by the projected sustained growth of the market; the low insurance penetration rate (and therefore room for growth); and its diversified economy – in particular, infrastructure and energy opportunities.
As a syndicate at Lloyd’s, Nick Bacon of Probitas confirmed “Mexico is one of the most important markets for us and technology allows us to trade with smaller commercial businesses, providing opportunities which would not otherwise come to London”.
Bacon also observed that the CNSF (The Comision Nacional de Seguros y Fianzas), Mexico's insurance and surety bond regulator, is a member of the IAIS (International Association of Insurance Supervisors) which promotes fair and stable insurance markets across the world, giving added confidence to overseas insurance companies dealing with businesses in Mexico.
In support of this, Daniela Curiel of Axa commented that, whilst Solvency II requirements had not been easy for all Mexican insurance companies, particularly the smaller businesses, it has created an important dialogue and a level of market discipline, corporate governance and transparency unprecedented in the region.
Arias added that the Mexican market had expected many companies to leave or merge with the introduction of Solvency II, but this simply didn’t happen.
The progress of insurance regulation in Mexico was further demonstrated by Alejandro Carabias Icaza, Head of Regulations Unit, ASEA (Agencia de Seguridad, Energía y Ambiente), which was set up to regulate and supervise safety in the oil and gas sector, including implementing the requirement of certain warranties on insurance policies. Throughout project tender processes, for example, it is now mandatory for winning contractors to have sufficient civil and environmental liability insurance in place before they can start any work. Sub-contractors must also have proven insurance in place.
Echoing the messages delivered by Pérez-Jácome at the start of the congress, recent initiatives in insurance are expected to increase efficiency, productivity and allow Mexico to become ever more attractive as a key market for business with the UK.