Mitigating Future Risks

Q: How is Aon adapting its insurance services to disaster risks?

A: In any developed country the vast majority of losses brought about by a natural disaster are covered by the insurance market. In many instances the government does not have the capacity or the resources to provide compensation for losses. We recommend that all citizens and companies that have the capacity to buy insurance should seek proper consultation on the risks and coverage that exist and understand how to protect their assets. All individuals, companies and every asset or investment needs to be protected in case of a natural disaster or accident.

Q: What strategies can be applied to ensure competitive and transparent bidding processes?

A: It is crucial that a bidding process elicits trust to attract the most suitable vendors. We believe that direct assignments should be eliminated because they often overlook companies that could add value in the development and implementation of new technologies or services in the industry. It is essential to hold open transparent bids that guarantee valuable vendors are not eliminated before the process starts. There should also be open meetings to clarify information so that the service providers fully understand the terms, implications and risks of the requirements. In this way, the offer will be clear and will meet both the technical and pricing needs. The final assignment should always be audited by an independent party, which should also take full responsibility throughout the tendering process to ensure complete transparency. This optimizes the process and ensures the proposals truly meet the requirements and provide the greatest added value. Companies tend to give greater importance to the financial side of proposals but we emphasize that the same importance, or even more, should be given to the technical offer.

Q: What hazards are prevalent in land acquisition for infrastructure projects?

A: Land rights and title security are two of the greatest problems. Infrastructure projects such as railroads, highways and bridges normally require large tracts of land and the vast majority of these projects will run into either communal or ejido lands. Various projects have been blocked in Mexico and there have been substantial losses because companies failed to foresee the implications of land tenure. Negotiating with tenants is highly complicated. Another problem is that information systems such as the National Transparency Institute (INAI) do not work adequately. Oftentimes, properties are not registered correctly or information is mistaken or not updated, which can lead to ill-informed investment.

Q: How are insurers mitigating the threat to telecoms from cybercrime and hacker attacks?

A: The telecommunications industry is generating significant investment for the development of new technologies and every day new risks arise for which insurance companies are developing coverage. Companies in this sector should always analyze their assets, calculate how much risk the company can absorb and transfer as much as possible to insurance. Cybercrime is one of the biggest concerns not just for the telecommunications industry but for all companies, especially banks and the financial sector. Companies must protect client information and there is specialized coverage for these particular risks.

Q: What challenges must the infrastructure industry face and how can Aon help?

A: In the short term, the infrastructure industry must experiment and develop a great deal of knowledge in almost every field. Regulatory schemes, such as PPPs, are facilitating the creation of partnerships between the public and private sector. As for the insurance of private assets, the rapid evolution of technology keeps pushing demand for new products. Mexico has a favorable geographic positon, a large population and promising opportunities. The country should be able to grant security to Mexican and foreign investors. The development of Mexico’s middle class will play an important role in accelerating the development of the economy, which will generate even more investment, especially in the infrastructure segment. The government’s task is to continue supporting infrastructure improvement across the country because that will be the foundation for further economic growth.