Tech and trade: the forces reshaping Latin American reinsurance

“We’ve been in the region for more than 100 years: business is good for us and has been good for many years,” said Kaspar Mueller, President Reinsurance, Latin America at Swiss Re. 

Swiss Re’s long-standing presence and expertise make it a key player, particularly in natural catastrophe risks.

“We’re comfortable insuring core risks, and we’re also focusing on growth in life and health and what we call special lines. 

“We see good opportunities in marine and engineering.”

When comparing Latin America to other markets, Mueller noted: “It’s more focused on nat-cat risks and the insurance market is just somewhat less developed.”

That presents a major opportunity and Mueller explained how Latin America continued to be on the lower end of the insurance S-curve, meaning “great potential for increasing penetration”.

Though the insurance market has remained stable, political and macroeconomic shifts have had an impact. 

“The region continues to go through massive transformation,” Mueller said. “If you look at macro factors, particularly changes in government, those decisions have a significant impact. Not always good ones.”

This volatility affects Swiss Re’s business. “We’re highly correlated to economic growth.”

When asked about the growth occurring in this market, Mueller did not highlight one specific growth driver. 

Instead, he feels broader trends shape the market. 

“Infrastructure will continue to be a huge topic–roads, trains, and basic needs that require renewal or construction. That helps us. 

“On the property side, on the engineering side, there’s a lot of protection that comes in.”

Life and health insurance is another area of growth: “There’s a significant protection gap. As societies mature, that gap is narrowing because there’s more recognition of necessary products. 

“Innovation is increasing, offering small, targeted products. In terms of numbers of products sold, that has grown significantly.”

Dealing with uncertainty

Trade and inflation risks remain key challenges, and Mueller mentioned the new US government. 

“Unfortunately, trade barriers and inflation risk with the new US administration have clearly gone up. Just what we’ve seen over the last two weeks has had a massive impact.”

Uncertainty is the real issue, according to Mueller.

“I’m not making any projection of what the administration will impose, but tariffs are obviously not going to help. 

“Even with a 30-day pause, the uncertainty is damaging.”

On inflation, Latin America’s central banks initially performed well, doing “a really nice job bringing inflation down, and actually quicker than many other countries” but Mueller is concerned.

“Now, they’re keeping inflation at the higher end of the tolerated band, meaning if there’s an external shock, the risk of inflation exceeding that band is higher.”

Legal uncertainty is another ongoing challenge, as Mueller pointed out: “In our business–where we’re selling promises for the future–if we don’t have legal certainty, it’s difficult for our product to be attractive, and it’s difficult to do business.”

Mueller cited a recent report that projected Latin American insurance premiums could grow by 3.8 per cent in 2025, but Mueller is taking a long-term view. 

“Over the next decade, I’m convinced Latin America will grow above the global average.”

Why? “The factors are there. A young population, economic catch-up and an even larger catch-up in insurance growth.”

Yet, he remains cautious. “If we had this discussion in 2013, I would have made a similar prediction. 

“We are here for the long term. We are one of the largest players in the market, and we want to continue to be that”

“And yet, from 2013 onwards, we saw a decade of zero growth. So, while Latin America is labelled a high-growth market, we have to look at it in long cycles.”

Technology is set to transform the industry. “Multiple trends will significantly change how we do business in the medium term.”

One is digital distribution. “The number of products sold online has surged, “Mueller explained.

“Life insurance with smaller sums insured wasn’t possible before because it was too expensive to produce small-ticket products.”

Another is data. “In a region with poor data quality, having additional sources and using actuarial models augmented by AI will give us a better view on risk and reduce premium uncertainties.”

Finally, Mueller emphasised Swiss Re’s long-term commitment. “We are here for the long term.

“We are one of the largest players in the market, and we want to continue to be that.”

Kaspar Mueller is the President Reinsurance in Latin America at Swiss Re. He can be contacted at Kaspar_Mueller@swissre.com

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