How a little local knowledge paved the road to profitability

For more years than the international reinsurance community cares to remember, Colombia was considered to be an unstable place in which to do business. But by the end of 2002, more reinsurers were being attracted to the market, some for the first time. A better knowledge of local conditions was one factor which encouraged companies but the fact that high rates and strict underwriting prevailed in the market was clearly another. A third factor was the fact that natural disasters and acts of terrorism, such as the Asian tsunami and the London bombings, were becoming more common in areas of the globe well away from Colombia and, indeed, Latin America as a whole. These areas thus began to look more attractive to reinsurers.

At March 2008, according to statistics prepared by the Financial Superintendency of Colombia (Superintendencia Financiera de Colombia - SFC), there were 44 insurers in total. Of these, 22 were non-life insurers, 20 were life offices and two were cooperatives. There are no locally registered professional reinsurers. Colombia’s existing reinsurers are all foreign companies, some of which operate through representative offices whilst others work as brokers.