Puerto Rico and the Bahamas in particular were hit hard respectively by hurricanes Maria in 2017 and Dorian in 2019. Insurers on those islands incurred significant losses, with some going through the top of their reinsurance programmes as a result.
In response, Müller, Swiss Re’s president of reinsurance in Latin America, told The Insurer in a video interview that the buying habits of insurers impacted by the storms have evolved.
“It’s very clear that [on] the islands that were hit, the programmes look very different today than the programmes on the islands that weren’t hit,” Müller said.
In Puerto Rico, there has been a hardening of the original insurance rates, as well as those for reinsurance. These price increases are recognising the risk that the islands are exposed to, he said.
“We clearly see that there’s more protection being bought, and return periods are being adjusted,” the executive said. He added that heightened concern about the accumulation of smaller losses means more back-up covers are now being purchased as well.
Another trend, Müller said, has been the growing number of parametric products being offered in the region.
Müller’s comments come close to a year after he was appointed president of Latin America for Swiss Re. Since the start of the year, reinsurers have been dealing with the challenges associated with Covid-19.
According to Müller, there was some uncertainty as to whether the infectious disease exclusions that have become prevalent in programmes would be introduced in Latin America.
But the executive said there was no longer any question about whether they are included.
“It’s clear and it’s now a requirement, particularly for commercial accounts,” he said.
Another key consideration for the Latin American market has been the impact of civil unrest throughout the region. While the riots in Chile drew the most attention, there has also been unrest in other Latin American countries.
As Müller explained, there have been strikes, riots and civil unrest “across the region”, and as such “there’s much more focus on this across the market”.
Even before Covid arose, Müller said Latin America “was in a somewhat difficult place with political challenges”, and that is being considered by carriers now.