Insurance Growth Report 2024 podcast series - Episode 2: Exploring growth activity in the US and Latin America

Welcome to the second instalment of the Growth Report Podcast Series, hosted by Peter Hodgins, Global Head of Corporate Insurance at Clyde & Co. Delving into the key growth factors uncovered in our 2024 Growth Report, this episode focuses on the US and Latin America with guests Marc Voses, Partner in the New York office, and Felipe Hoetz, Partner in Santiago, Chile.

The discussion begins with a review of the insurance M&A market in both LATAM and the US, outlining the biggest areas of interest, growth, and some key deals. Next, we hear some key examples of opportunities and risks in both regions, before guests explore regulatory changes, enforcement activities, and compliance efforts. Hodgins probes on the impact of geopolitical tensions on the insurance market and, to conclude, guests offer their growth predictions and advice on navigating the ever-evolving landscape.

Providing an overview of the M&A market in LATAM, Hoetz discusses some substantial deals that have taken place, including HDI's purchase of Liberty in Colombia, Chile, and Ecuador for $1.5 billion, and several other large transactions. Shifting focus to the US, Voses outlines growth opportunities, spanning “climate change, cyber risks, the rise of parametric insurance, the implementation of AI, and M&A activity,” noting the latter could be encouraged by “lower interest rates, lower inflation, implementation of insurtech… and consolidation of operations.”

In a review of broader opportunities and challenges, Hoetz explores the recently enacted Fintech Law in Chile, which should “enable insurance companies to adopt the latest technology more quickly,” along with a new white-collar crime bill, which now considers crimes against the environment and should drive interest in D&O. In the US, Voses outlines new risks and cover associated with the rise of working from home, including protection for cyber and other incidents.

On the regulatory front, Hoetz provides a more detailed look at the landmark Fintech Law, which Hodgens notes involves “regulating over 70 topics within 18 months,” including a new Cybersecurity Framework and Policy. Meanwhile, US regulators have been focused on data privacy in cross-border transactions, specifically a new EU-US privacy shield framework which Voses says “addresses key concerns” and “allows for free transfer between the EU to the US”, albeit with some stipulations.

With geopolitical tensions a major concern across the insurance sector, Hoetz points to the creation of a $1 billion fund to foster the green hydrogen industry in Chile, and implications for power and influence in the region: “all the big players are always looking at opportunities, and this time it's supporting this new type of energy,” he says.

For US insurers, the big focus is on US elections and the threat of political violence and civil unrest, along with financial and trade risks from possible instability. Voses says insurers must assess: “…where they have coverage for risks that might be impacted by either civil unrest or political risks,” and companies should have “political risk or trade credit insurance lined up that will respond.”

Concluding with a look ahead, Hoetz is optimistic about big projects in the pipeline, while advising firms to stay alert for regulators, saying: “The fact that they are enacting and producing and issuing new regulations doesn't mean that they don't have time for supervising.” From Voses’ perspective, the focus should be on seeking opportunities to build value, including through technology, and “tightening up underwriting in a year where insurers will likely see a significant uptick in claims and potentially claim severity.”