Hiring engineering and mining insurance is a strategic matter

Activities, Insight

At an event held in São Paulo, MDS Insurance & Risk Consultants called attention for the need of hiring insurance and risks prevention for big infrastructure works in Brazil.

On July 18, in São Paulo, MDS Insurance & Risk Consultants invited some of the main businessmen of the mining and engineering risks industries to debate the future of the big infrastructure works in Brazil during the Insurance & Risk Management seminar. The event was held in a partnership between MDS and Cooper Gay, an enterprise bound to MDS Holding which is one of the biggest reinsurance brokers of the World.

The audience, composed by businessmen directly bound to the mining and infrastructure industries, had the opportunity to analize the reality and the peculiarities of both markets under the view of the main risks which this activities are exposed and the enterprises’ needs who use services like risks management, reinsurance, and engineering insurance. Besides, the speechers presented the perspectives for the next years in a world and national scale. “Brazil is bound to be a true infrastructure work site. The enterprises must have doubled attention. Therefore, hiring engineering and mining risks insurance have become even more  strategic for the interprises to grow in our country”, said HélioNovaes, MDS Brazil’s CEO.

The mining and infrastructure industries have been gradually growing, so the demand for more safety and the management of the complexities due regulatory and environmental laws of this market. And this is a big opportunity for the insurance industry in Brazil, in a market bound to reach until R$ 4,2 billion in prizes. “The insurance market certainly will follow the expansion tendency of these sectors. After all, wherever there are investments, there are good opportunities for good affairs in insurance”, says HélioNovaes.

 


Evan Greenberg

Insight, Perspectives

This perspective was published in Full Cover magazine, issue 4

With over 25 years in business, ACE  concentrates half of its operations in the  United States and North America, but its  ambition is to reach down into South America  and East toward Southeast Asia even as it  continues to eye opportunities across Europe.  Chairman and CEO Evan Greenberg defines  ACE as an optimistic organization which is  uniquely positioned to make the most of  growth opportunities.

25 years in business

ACE started in 1985 – just over 25 years ago – as a result of a liability crisis in the U.S. Approximately 34 U.S. corporations that needed excess liability insurance got together and agreed to form an insurance company quickly. To do that, they decided to go offshore; so they incorporated the firm in the Cayman Islands andfor risk management purposes, they domiciled the head office and principal operations in Bermuda.Back then, ACE was a single-product, single-location company. In the subsequent 25+ years we have grown to be one of the largest multi-line global insurers operating today. Half of our business is transacted in United States and North America, and the other half is in over 50 other countries and territories around the world.  We operate in all of the important and principal markets in Latin America, in Asia, and in Europe I think that’s quite an achievement out of nowhere, in just over a 25-year period.

Growth: opportunities and challenges

While Brazil, in terms of the size of opportunity, represents the greatest opportunity today in the region, and certainly casts a big shadow, clearly we see and are very optimistic about the opportunities in many other countries in the region, including Chile and the Andean countries of Peru and Colombia.  Argentina is also doing very well for us. Turning to Mexico, it is also a significant insurance market for ACE and its economy is strong. However, Mexico doesn’t enjoy the same economic and regulatory environment that has ropelled Brazil, and that will weigh on the country’s growth for a period of time. We are heavily invested in the region, and are positioned to take advantage of the themes that we know are propelling growth: a rising middle class, fast developing economies which require infrastructure and energy to continue to propel their growth, and also to a degree, smaller government – that is, getting out of the way to support the growth of private sector business, from small businesses to large multinationals. There is a lot of talent and a lot of capability in the region, particularly in a country like Brazil, which frankly is almost a continent unto itself. Its size, its scale, its diversity of people, customs, and culture among the regions of the country  are extraordinary, and we have a very strong focus on Brazil and a very good sense in our minds of how to develop and participate as good local corporate citizens and support the growth of the country and the economy. No economy develops without a strong insurance industry and we’re participating in that. We are well placed throughout the country, as we are throughout the region.  I am very optimistic about the prospects – in Brazil, in Mexico, but, as I say, in Latin America generally.

Incentives to a strong brokerage industry

We rely on, and are supportive of, a strong brokerage industry.  Marsh, Aon, and Willis are the three largest brokers, and we support and encourage their growth, and are pleased when we see them going from strength to strength. But at the same time, we support a diverse distribution industry, as it requires more than three brokers. So, as the brokerage community is our chosen means of distribution, we support the continued growth of the brokerage industry in general, on a global basis. The broker networks are and have been very important. What these networks do is allow smaller, local brokers to compete against larger brokers, particularly when it comes to transnational business. Whether these networks are multi-national or regional, they need to follow their customers. As the world economy globalizes there is no putting that back in the bottle – this is a trend that will continue, though not without its trouble spots. Brokers have to be able to serve their clients, and to serve your clients you have to be able to follow them across borders, and we see most businesses, small or large, have their fortunes tied to being able to do business outside their home country. Because they’re going to go where opportunity is, broker networks are an answer to that for smaller brokers and we encourage and support that development.

Multinational programs

We’re one of the few global property and casualty insurers operating in the world today. We are on the ground in 53 countries with local operations and we can serve the needs of customers whether they’re local or multinational.We have the balance sheet, the services, the risk appetite, the sophistication – and more importantly, the integrated corporate culture and network, enabled by technology – to serve the needs of multinational companies around the world, both in risk transfer and risk management.  We have the product appetite and breadth to meet their requirements, and there are very few companies in the world that have that capability – I can count them on one hand.  Some of them do it well, and some of them don’t, and I put our company right at the top of the list of those that do it well

A stable, over-regulated industry

The insurance industry has shown remarkable stability during and following the financial crisis, in contrast to the rest of the financial services industry. Even in this moment of volatility, our industry has been remarkably stable and has continued to serve society and its shareholders and its policyholders, I think, in an admirable fashion. The industry should be proud of that. The balance sheet of the industry overall is in good shape and I think the industry’s ability to deliver its product and service is quite efficient. At the same time, the industry’s focus on return on capital and a proper risk-adjusted return on capital is wanting, and that is because we are in a cyclical business and many organizations, regardless of their words, show by their actions that they chase market share at the expense of an adequate return. The industry in the last 18 months has experienced significant catastrophe loss activity, and has acquitted itself extremely well. It has met all its obligations in a timely and fair process. But the industry can only take risk to the extent of its balance sheet.  This issue of catastrophe risk goes well beyond the insurance industry – it’s a political and social issue.  Regulators and politicians must wrestle with the fact that insurance is only part of the solution. We have to be able to charge the proper risk-adjusted rate. Inadequate building codes and allowing people to build in areas that are terribly catastrophe prone – without the recognition of the consequences – represents a tremendous cost to society. That’s what I worry about. And, that there is always a populist movement to keep insurers from charging the proper rate, which means we’re subsidizing bad behavior. Not addressing the proper building codes because of cost is subsidizing bad behavior. We are allowing over-concentration of values to develop in catastrophe prone areas, and I worry about the social implications of that in the future. Many of the changes taking place that impact the insurance industry are ill thought out and it is not clear to me what problem they are trying to address. While the modernization of insurance regulation and oversight is important, the principal goal of regulators should be to protect policyholders’ interests, and, given the performance of the insurance industry during the financial crisis, it is not clear to me how all of the regulatory activity, particularly that which is taking place in Europe, will make the industry better.  There is too much bureaucracy, too much “regulation on top of regulation”, and I think it represents an unnecessary tax on the industry. Ironically, all of this will only create more inefficiency without necessarily improving insurance company performance. I am tremendously optimistic about the future of my company. And it is “steady as she goes”. Insurance is a long-term business, and building a successful insurance company, in my judgment, requires patience in strategy and impatience in execution.


BrokersLink 2012 Global Conference in Madrid

Activities, Insight

Each year MDS and BrokersLink works diligently to put together the best global conference possible, and a big part of that effort is securing authoritative, insightful speakers. This year we’re pleased to announce that Robert H. Benmosche, the President and CEO of the American International Group, will be in attendance and will deliver a keynote speech to the BrokersLink community in Madrid.

BrokersLink global alliance is a proud partner of AIG/Chartis and credits this powerful union as a driving force behind the alliance’s impressive growth over the years. Both as a voice of AIG and an executive with considerable experience and knowledge in the field, Mr. Benmosche will touch upon his company’s impressive rise from the incredible challenges of the financial crisis of 2008 and beyond.

Featured among Fortune’s Top 50 Business Leaders and named Executive of the Year by The New York Times DealBook in 2010, Mr. Benmosche brings a distinguished background and unique perspective to the conference lineup.

No matter the specialty or region of focus, insurance professionals are sure to benefit from this opportunity to hear Mr. Benmosche speak. He is scheduled to appear on the afternoon of Thursday, October 19. We anticipate an instructive and powerful session in Madrid.

 


Leveraging knowledge

Insight, Knowledge-Center

MLearning is the latest project developed by MDS Group, created with the purpose of developing, advancing and supporting knowledge management in Risk and Insurance. To company director Paula Rios it represents “a logical outcome of the current environment in this Group, which has established itself in different parts of the world and carries out complex, diversified activities, ever on a forward path.”

Established in mid-2011, MLearning found that the market urgently called for systematic processing, organizing and structuring information that was shareable not only internally but also with the market and society at large, thus taking full advantage of the knowledge capital the MDS Group has amassed. The purpose? To develop strategies that bolster innovation, the creation of new knowledge and its translation into products and services.

According to Paula Rios, “knowledge management is understood as the main sustainable competitive advantage that organizations possess. It allows them to face current challenges posed by a knowledge and information society, thus successfully facing the opportunities and threats that stem from economic globalization.” She adds: “For several years now, MDS has stressed the greatest asset in our activity: knowledge and the ability to use it to the benefit of our clients and the market.”

Expected results include, among others, access to state-of-the-art knowledge on risk and insurance, the reinvention and creation of new perspectives on traditional market products and the identification of new risk and related management solutions.

Editorial projects fill a gap in the market

MLearning works along four main channels: training – development of skills pertaining to risk and insurance; organizing seminars and conferences; active, structured sharing of documentation and published materials through the Knowledge Management Center; and the development of new content and published material.

As for the later channel, Paula Rios explains why MLearning will go into the publishing world: “In Portugal, titles on insurance and risk are scarce, as these matters have received very little attention from learning institutions, such as universities. Fully aware of this opportunity, MLearning is embarking on a few publishing projects.” Among these are “Colecção Testemunhos” (“Testemunhos Collection”) and the “Fundamentals MLearning” manuals.