Last month I attended the 10th annual Latin American Maritime Insurance Association (ALSUM) conference in Mexico City, hoping to learn about the challenges faced by the Latin American marine insurance market.

Lack of market penetration relative to gross domestic product (GDP) output continues to plague this market, stemming from limited awareness or trust in insurance benefits. Above all, there is a lack of affordability by a large sector of the population. During the conference, there were calls for insurance solutions tailor-made for low-income sectors, such as microinsurance for road carriers, and parametric insurance. In the wake of the Covid-19 pandemic, the market has been exposed to the use of increased technology, increasing cyber-related attacks. This, subsequently, led to an overall awareness of the need for this type of insurance product.

Climate changes and extreme weather events have severely affected Latin America, with typhoons, hurricanes, heavy rains, coastal storm surges, avalanches and flooding, resulting in the displacement of people, fatalities, and damages to ageing infrastructure and hinterland connections. Widespread droughts in some areas have resulted in record low river levels, as in the Parana River in Argentina, leading to an increase in grounding claims, as reported by the ALSUM Hull Committee.

Theft of cargo in storage and transported on highways continues to plague Latin America. Even though there was a decrease in claims during the pandemic due to reduced freight activity, the trend has changed. With increased freight movement from 2021 to 2022, there is a noticeable rise in losses due to theft.

Finally, it has been noted that the region has been experiencing social unrest and demonstrations stemming from public dissatisfaction with corruption, electoral fraud, inflation, food shortage, unemployment, lack of health care, and environmental concerns. Public frustration with  governments to address these issues has led to the election of left-wing governments in several countries. How this affects the perceived risk factor per country and foreign investment was a topic of discussion, as well as the challenge of introducing Environmental, Social and Governance (ESG) practices in all sectors, including the marine insurance market.