In an effort to expand Latin American trading relationships, on 21 June 2016, Lloyd's opened its first Colombian office, located in Bogotá. Colombia is recognised as a quickly developing hub for facultative reinsurance and Lloyd's has been established in the Colombian market for many years particularly property, energy, aviation, financial lines, liability and construction lines.
In addition, two Lloyd's insurers, Advent and Brit, will be on the Lloyd’s Colombia platform and it is hoped that more Lloyd's insurers will join in the future.
The Chairman of Lloyd's, John Nelson, commented:
“Colombia is an important part of Lloyd’s future growth strategy, both as a fast-growth market and as a gateway to Latin America, and I am delighted to be opening our office today....Colombia is a growing economy which is making significant investments for the future. However, insurance penetration is one of the lowest in Latin America, at only 1.6% of GDP....As Colombia realises its economic potential, insurance and reinsurance can play a key role in supporting this economic growth by improving resilience, taking risks out of the country, and helping the economy recover after catastrophes.”
Lloyd's believes that there is considerable opportunity for growth since insurance penetration rates in Colombia currently stand at approximately 1.6% compared with 6.1% global average. In addition, a report by Lloyd's on underinsurance noted that Colombia has an underinsurance gap of $570 million against its natural catastrophe exposures.
A recent study by Lloyd's and Cambridge University, the City Risk Index, found that Bogotá and Medellín will generate $2.5 trillion in economic growth over the next ten years but could have $44 billion at risk from a series of threats. The top threats for both cities are: earthquake; market crash; human pandemic; terrorism; and volcano.
For guidance on Colombian insurance and reinsurance law and claims handling considerations to underwriters, claims handlers and their representatives who have business in Colombia, please see HFW's interactive guide to managing claims and re/insurance law in Latin America, which can be found at:http://www.hfw.com/insurance-latin-america-map.