Geopolitical conflicts, populism and an increasingly complex regulatory environment are the main risks for insurance in LATAM

At the Geneva Association Assembly, MAPFRE chairman and CEO Antonio Huertas defended public-private collaboration and the role that the insurance industry can play in tackling the challenges facing the global south, especially in Latin America.

At the Geneva Association Assembly (GA), the global association of insurance companies, held in Kyoto (Japan), Huertas participated in the panel “A new economic world order: The emerging possibility.” The chairman and CEO of MAPFRE outlined the main challenges and opportunities that insurance companies face in emerging markets, especially in Latin America, where MAPFRE is the leading multinational insurer.

According to Antonio Huertas, these regions face three major risks that may affect their evolution. The first is geopolitical conflicts, which, among other social effects, disrupt economic activity and international trade. The second is populism, fueled by social inequality, which ends up with the introduction of protectionist measures that weaken the international integration of those markets. Thirdly, and coming on the back of the first two, Huertas referred to the risk of regulatory fragmentation that will produce an increasingly complex supervisory environment for the sector, resulting in a greater administrative burden due to the compliance factor, which will ultimately harm the competitiveness of global companies.

Despite all this, Huertas affirmed that there are compelling reasons to be optimistic about the economic future of emerging countries, such as well-oriented monetary policies, inflation levels that are close to the objectives set by their authorities and financial conditions that are improving systematically.

In addition, there are three major trends that will mark the future in economic matters in these countries, and in which insurance can play a significant role. Firstly, there is the increase in public debt driven by growth initiatives, an investment that hasn’t yet transferred over to the GDP of emerging countries. Secondly is the low level of gross private savings, which at about 20% in Latin America, is still insufficient to finance investment and infrastructure, and opens up a space for insurance to grow and develop. And finally, there is the aging populations of these countries, which may lead to problems in the pension and dependency management system if rapid reforms related to savings and public systems aren’t implemented to address this reality, which may also stir up additional political and social tensions.

The chairman and CEO of MAPFRE stated that, in this context, insurers have the capacity to contribute to the resilience of society, a role in which he called for collaboration with political leaders. “The social nature of our work behooves us to continue helping these economies reduce investment and protection gaps, focusing on supporting social objectives and ensuring a level playing field for all companies,” he concluded.