Risk Insider: Matthew Nielsen

Latin America’s Insurance Industry Advances

By: | June 6, 2016 • 2 min read
Matthew Nielsen, a meteorologist and geographer with a great deal of experience in climate hazard models, is Senior Director, Global Governmental and Regulatory Affairs at RMS. He can be reached at [email protected]

Over 600 million people call Latin America “home,” with hundreds of thousands lifting themselves out of poverty and into the middle class each year.

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But how many of those citizens or businesses are prepared for a major catastrophe, such as the earthquake that struck Ecuador on April 16? How many of them are thinking about catastrophic floods, such as those experienced in Paraguay and neighboring countries in 2015?

And if they have insurance, are the insurance markets in each country prepared to handle a financial disaster?

While these questions are difficult to answer with any certainty, it is comforting to know that the region is in the process of understanding the implications of future events. Countries from Costa Rica to Chile are beefing up their review of solvency standards for companies operating in their insurance markets, and companies are stepping up to the challenge.

While economic growth has slowed in Latin America in recent months and political turmoil has begun sprouting up in countries like Brazil, the future prospects for the region are as bright as ever.

Insurance regulators, such as those operating in Mexico, Colombia and Peru, for example, are implementing more comprehensive reviews for insurance companies.

In Mexico, implementation of Solvency II is ongoing, with the first two pillars (corporate governance and reporting) said to be already in place. Colombia recently initiated a process to review and approve earthquake catastrophe models for use by primary insurers. Peru has already put such a process in place.

Models are at the heart of this leap in sophistication. Some countries are setting up review processes for external models, similar to the requirements set forth in the first pillar of Solvency II.

Countries like Colombia and Peru developed interrogatories for reviewing these external models, hiring experts in the fields of seismology, engineering and actuarial science to review submissions.

Other countries, like Costa Rica, are investing in building their own models to help them understand their catastrophe exposure, a lengthy and costly endeavor.

In some cases, the increased insight into insurance industry risk brings to light vulnerabilities in the local markets. Costa Rica, for example, only recently privatized its insurance market.

Another vulnerability is the lack of insurance penetration. In Costa Rica, like much of Latin America, insurance is limited to commercial, industrial and high value residential risks. When it comes to protecting houses of working-class families, however, recent efforts fall short.

While companies are beginning to increase their market share and expand insurance penetration, regulators believe that the market won’t be able to help the country recover from a major natural disaster.

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While economic growth slowed in Latin America in recent months and political turmoil bedevils countries like Brazil, the future prospects for the region are as bright as ever.

Businesses will continue to grow and invest, and home ownership will continue to rise. As the region grows, so too will the need to protect the assets accrued during this economic expansion.

Insurance is crucial to the resilience of Latin America, and a healthy insurance market will ensure that the region will continue to grow and prosper, despite the threat of natural disasters.

More from Risk & Insurance

More from Risk & Insurance

Risk Management

The Profession

Wawa’s Director of Risk Management knows that harnessing data and analytics will be key to surviving the rapid pace of change that heralds new risk exposures.
By: | July 27, 2017 • 5 min read

R&I: What was your first job?

My first job was at the age of 15 as a cashier at a bakery. My first professional job was at Amtrak in the finance department. I worked there while I was in college.

R&I: How did you come to work in risk management?

A position opened up in risk management at Wawa and I saw it as an opportunity to broaden my skills and have the ability to work across many departments at Wawa to better learn about the business.

R&I: What is the risk management community doing right?

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The advancements in analytics are a success for the industry and offer opportunities for the future. I also find value in the industry focus on emerging and specialty risks. There is more alignment with experts in different industries related to emerging and specialty risks to provide support and services to the insurance industry. As a result, the insurance industry can now look at risk mitigation more holistically and not just related to traditional risk transfer.

R&I: What could the risk management community be doing a better job of?

Developing the talent to grow with the industry in specialization and analytics, but to also carry on the personal connections and relationship building that is a large part of this industry.

Nancy Wilson, director, quality assurance, risk management and safety, Wawa Inc.

R&I: What was the best location and year for the RIMS conference and why?

I have had successes at all of the RIMS events I have attended. It is a great opportunity to spend time with our broker, carriers and other colleagues.

R&I: What’s been the biggest change in the risk management and insurance industry since you’ve been in it?

I think the biggest challenge facing most companies today is related to brand or reputational risk. With the ever-changing landscape of technology, globalization and social media, the risk exposure to an organization’s brand or reputation continues to grow.

R&I: What emerging commercial risk most concerns you?

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The changing consumer demands and new entrants into an industry are concerning. This is not necessarily something new but the frequency and speed to which it happens today does seem to be different. I think that is only going to continue. Companies need to be prepared to evolve with the times, and for me that means new risk exposures that we need to be prepared to mitigate.

R&I: Are you optimistic about the U.S. economy or pessimistic and why?

I try to be optimistic about most things. I think the economy ebbs and flows for many reasons and it is important to always keep an eye out for signs of change.

R&I: What have you accomplished that you are proudest of?

I am fortunate to have opportunities professionally that make me proud, but I have to answer this one personally. I have two children ages 12 and 9 and I am so proud of the people that they are today. They both are hardworking, fun and kind. Nothing gives me a better feeling than seeing them be successful. I look forward to more of that.

R&I: What is your favorite book or movie?

This is really hard as there are too many favorites. I do prefer books to movies, especially if there is a movie based on a book. I find the movie is never as good. I have multiple books going at once and usually bounce back and forth between fiction and non-fiction.

R&I: What’s the best restaurant you’ve ever eaten at?

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I have eaten at a lot of different restaurants in many major cities but I would have to pick Horn O’ Plenty in Bedford, PA. It is a farm to table restaurant in the middle of the state. The food is always fresh and tastes amazing and they make me feel like I am at home when I am there. My family and I eat there often during our trips out that way.

R&I: What is your favorite drink?

I do love a good cup of coffee (working at Wawa helps that). I also enjoy a good glass of wine (red preferably) on occasion.

R&I: What is the most unusual/interesting place you have ever visited?

Vacations aside, I do get an opportunity to travel for work and visit our food suppliers. The opportunities I have had to visit back to the farm level have been a very interesting learning experience. If it wasn’t for my role, I would have never been able to experience that.

R&I: What is the riskiest activity you ever engaged in?

My husband, kids and I recently did a boot-camp-type obstacle course up in the trees 24 feet in the air. Although I had a harness and helmet on, I really put my fear of heights to the test. At the end of the two hours, I did get the hang of it but am not sure I would do it again.

R&I: If the world has a modern hero, who is it and why?

The first people that come to mind are those who are serving our country and willing to sacrifice their own lives for our freedom.

R&I: What about this work do you find the most fulfilling or rewarding?

Every day is different and I have the opportunity to be involved in a lot of different work across the company.

R&I: What do your friends and family think you do?

My husband and children have a pretty good sense of what I do, but the rest of my family has no idea. They just know I work for Wawa and sometimes travel.




Katie Siegel is an associate editor at Risk & Insurance®. She can be reached at [email protected]