The president of Mapfre, Antonio Huertas, has defended this Wednesday that the insurance industry in Latin America, in coordination with public administrations, must evolve from a model focused on bearing the cost of rebuilding after accidents and natural disasters to another that prioritizes, in advance, the financing of resilience.
Along these lines, Huertas has underlined that Ibero-America has "extraordinary potential," although it has gone too long without making the leap to action due to the complex economic and social circumstances the region faces.
"Ibero-America has enormous natural resources, human capital, large markets, an extraordinary cultural wealth and a privileged position regarding some of the transformational realities of our time, but it also has structural situations that we know well, such as insufficient domestic savings, low levels of investment, low productivity, or high informality...", the top executive of the Spanish insurance Group highlighted during his intervention at the second day of the XVI Ibero-American Business Meeting (EEIB).
In this context, Mapfre’s representative explained that if the region wants to unlock all the potential it has, "there has to be a move away from talking about abstract opportunities and focus on three elements: institutions, investment and resilience".
Among the concerns that most worry Huertas in Ibero-America is the impact of climate change. In quantitative terms, the executive recalled that Latin America has been hit by a natural catastrophe every week over the past 50 years and by one and a half per week in the last decade. "All of this has taken more than 100,000 lives and has caused losses exceeding $360,000 million," he stressed.
Huertas also warned that, given these episodes that are becoming increasingly common, the response of States focused on addressing the emergency, rebuilding infrastructure, supporting families and sustaining the subsequent economic recovery may lead to "an economic, budgetary and social crisis," since the fiscal margin is "very limited".
For this reason, the executive has called for the role of insurance as a protective safety net for homes and companies and as a tool to ease the public finances of the Governments of the region.
"Insurance is an essential piece in that resilience. Insurance is not going to prevent the hurricane, it is not going to prevent the earthquake, nor the flood, but it can make a natural catastrophe stop becoming a catastrophe for families, for businesses, or for the country. And that is what we insurers do: transform uncertainty into resilience capacity," he emphasized.
As for the figures, Huertas has reiterated that in the catastrophes recorded in the last decade more than 80% of the losses were not covered by insurance in Latin America, compared with 57% worldwide, and he regretted that behind those figures there are "too many families, businesses and assets that are insufficiently protected".
PUBLIC-PRIVATE COLLABORATION
To deal with this situation, the person in charge of the Group has argued that public funds should be directed primarily to "the most vulnerable, who because of their income level cannot access private protection mechanisms and in the rebuilding of public infrastructure assets." Thus, he has urged that the private initiative be able to mobilize "its enormous financial and technical capacity" to provide coverage to the rest of those affected. "We do not lack instruments, we lack scale and, above all, we lack public-private collaboration," criticized the leader of the insurer.
In this regard, he has pointed out that companies need predictable regulatory frameworks, incentives for families and businesses to insure their assets, specific structures for catastrophic risks, and, above all, public-private mechanisms that make it possible to reduce the impact of disasters and respond quickly to needs. "We have to be able to move from financing reconstruction to financing resilience in advance," Huertas reiterated, who, in turn, has advocated "testing, measuring and scaling" in order to anticipate the impact that those major events later produce.
In this scenario, Mapfre's president has concluded that, as a recent report by the company and the Ibero-American Business Foundation states, up to 31,000 million dollars annually are required for resilient public infrastructure against flooding and hurricanes in the region, and that it is necessary to mobilize 15,000 million by 2030 to adapt and manage disaster risk.