Despite the incredible opportunities in Latin America, the market must shed its old image to fully capitalise, insists Stephen Jackson.

To my surprise, Latin America is often overlooked by the financial community in favour of the high profile, and admittedly fast motoring economies in the east, such as China and India. With a wealth of natural commodities – never as valuable as they are today – there are unquestionably opportunities out there for the insurance and reinsurance industry in a region which currently generates only about 1.5% of the world’s total premium. One of the sticking points, however, is that the re/insurance market here needs to do more to make doing business in Latin America a less bureaucratic and more timely business.

Everybody hears about the political risks presented by the left leaning governments in Bolivia and Venezuela while the actual security risks in Mexico (currently seen as a major hotspot for kidnapping), Brazil and Columbia are also well documented. This shouldn’t mask the opportunities there are provided you have the appropriate local representation and distribution.

Despite this, one of the biggest gripes to come from the London market is the tender system that many Latin American governments insist upon when insuring and reinsuring state-owned assets. This market is vast, with Mexico for example making it obligatory for all state assets to be insured since 1985 when a devastating earthquake hit the region.

“London needs to respond with more long-term thinking

The tender process however can lead to a long drawn out process which underwriters, having to re-quote every 12 to 18 months, find too cumbersome and time consuming. I believe the market could respond by placing more faith in the region and look to offer more in the way of multi-year deals. Governments naturally assume that these deals aren’t on offer and so a re-quote every year is inevitable. If the market could be more long term in its thinking then many of these risks could become altogether more profitable and the tender system need not be such a barrier to developing a solid book of Latin American business.

The local market for Latin American risks is growing and what is not placed in London will soon find a willing underwriter much closer to home. London needs to respond with more long term thinking to ensure the future premium of a potential economic powerhouse is not lost.

Stephen Jackson is Cooper Gay's managing director of Latin America