Risk Expertise in an Open MarketFri, 02/01/2019 - 08:58
Q: What added value does Munich Re provide to the Mexican energy industry that no other competitor can?
A: Mexico is subject to many natural risks such as hurricanes or earthquakes. The fact that Munich Re can get involved in a local project’s risk assessment by undertaking risk consultancy activities offers confidence to investors, especially to those coming from abroad that do not know about the potential risks their projects will be subject to in Mexico. We have developed relationships with most of the main players involved in risk assessment in Mexico. Every time we get involved in a project, we make sure our clients assess every risk related to their projects and also ensure a quick response when needed. When projects awarded during the first and second long-term electricity auctions enter into the design and construction phases, Mexico will become more attractive for Munich Re to showcase its capabilities for properly assessing the frequency of incidents, their severity and overall impact.
Q: How important is asset reinsurance in the global and Mexican markets?
A: 2017 was a record-breaking year. Insured assets worldwide suffered a total economic loss of US$340 billion due to natural catastrophes. Insured losses came to US$138 billion. It will be interesting to see how economic losses behave in the coming years, even more so considering the effect climate change is having on the frequency and severity of natural disasters.
One thing is for sure: only companies that are wellprepared to face risks, both in terms of understanding potential losses and the capital required to face those losses, will triumph in the market if an incident takes place. This is why the presence of an expert in risk assessment, like Munich Re, is needed from the very beginning of every project. The main challenge is definitely to close the gap between economic and insured losses to protect more projects through the insurance industry against unforeseen events.
Q: What makes Munich Re the perfect local partner in a globalized world?
A: The question already gives the right answer. With our service on site representing the whole group we can be a reliable partner to our clients and address their needs accordingly within our group. Needless to mention the scaling of experiences from other regions of the world.
Q: Is there an event in which Munich Re showcased its strengths and capabilities in the country?
A: When an earthquake hit Mexico City on Sept. 19, 2017, we established close and constant communication immediately with our clients. The first payouts were provided within just a few days to ensure prompt recovery work.
The communication channel was also open for client feedback about the situation, the way our activities were being undertaken, and whether they found them valuable. We even formed a task force in our Mexico City offices, with people coming from Munich and Bogota to support and supervise the activities. The short response time and high quality in all of the activities we performed has further strengthened the reputation of Munich Re and has attracted more clients that are happy to do business with us due to the capabilities we showcased.
Q: What did Munich Re learn from this natural disaster?
A: Companies tend to have a very optimistic view, even when considering the effects of a natural disaster. One important lesson that arose from this catastrophe was the high number of infrastructure installations that is not properly insured in the country, both in the public and private sectors. Both types of players have work to do in terms of insurance to get all of their assets properly covered. With our advice, companies can better structure action plans that take into account every aspect that may cause difficulties if an incident jeopardizes their activities.