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Joaquí­n Riesen

PANAMA - Finance

Premium Players

Superintendent, Insurance and Reinsurance


TBY talks to Joaquí­n Riesen, the Superintendent of Insurance and Reinsurance, on the rapidly growing segments in insurance, ease of entry for foreign players, and efforts to develop the industry.

According to the Panamanian Association of Insurers (Apadea), the sector is expected to experience a growth rate of 6% in 2016. Do you agree with this forecast?

It is a little bit ambitious but yes, it will be a year of positive growth. We expect growth of around 3-4% for premiums. The main reason is that the world of reinsurance is entering a soft market and rates tend to go down. Any major project today will be much less expensive compared to the same project 10 years ago. If we only measure premiums, there will be low rates of growth; however, if we measure policies, which are a better gauge of the insurance industry, the rates of growth are higher. The number of policies has increased more than 9% compared to last year, but for premiums the rate of growth is around 3-4%.

Which segments are growing the most?

Usually, the auto segment is one of the strongest. Even though we are a small country, more than 50,000 new vehicles are sold every year, which is a large figure. In terms of the number of policies, auto is one of the main segments, followed by fire, life, and health. In terms of premiums, auto comprises 14% of the market and it is growing. Usually, the negatives are related to projects. Insurance companies are fighting for business. There are not many countries that are growing the way Panama is. Competition is really high on the reinsurance side.

How high are the barriers to entry for foreign players, and what are the advantages of setting up here?

Panama is easy to enter. If you want to compete in Latin America, Panama is the heart, not only geographically but also in terms of connection. There is no other country in Latin America with more connectivity than Panama. It is cheaper to set up here compared to Miami, Mexico, or even anywhere in Colombia; it is also safer and a nice place to live. It is cheaper to run operations from Panama, and if we modify the reinsurance laws number 63 and 19 of 1996, we can provide tax benefits and other perks, such as not limiting the number of employees companies can bring to Panama. We are not aiming to increase the number of players in itself; we are targeting increasing the level of quality of the reinsurance market. There are many reinsurance companies; however, we want the best ones here.

How are you working to develop the industry?

The more solid the Superintendency, the better the market and the safer the reinsurance companies are going to be. It has been a year of changes as we are trying to bring the Superintendency to international standards. We are active in all the meetings with regulators in the region, the Americas, and Europe. We are watching Solvency II, an EU directive that harmonizes EU insurance regulation. However, it is unlikely that this will be the answer for Panama, as it hasn’t been the answer for Mexico. However, we have to work to bring the regulation to the same level as Europe or North America. On the consumer side, there is a lot to do. We do have good penetration in insurance; however, that is tied to the banking system, as it is mandatory to have fire and life insurance on a mortgage. In terms of life insurance, we are still behind Peru, Venezuela, Chile, and many other Latin American countries. We are also working to improve the quality of data we require from the market. We are going to separate premiums issued in Panama from those issued elsewhere; that will give us the true penetration rate. At the moment, it looks like Panama is the third Latin American country per capita on insurance penetration, but after next year we will have a better, clearer picture.



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