Risk-based capital and governance in Latin America

Risk-based capital is one of the most significant regulatory regimes to affect insurance companies. Given the different journey that Argentina, Brazil, Chile and Mexico face, we evaluate each market’s distinct view of the proposed single standard and the implications on insurers to drive their organizations towards business and regulatory compliance.

Gain perspective on the current state of each country as well as the benefits and challenges of implementing capital requirements, corporate governance and risk management:

  • Argentina: This region’s life and pension insurance market has become nationalized, making it less feasible to apply Solvency II methodology in the future.
  • Brazil: Companies here recognize that failure or success requires constant improvement of data governance, combined with well-informed risk-evaluating intelligence and technology through underwriting, risk classification, pricing and reserves. This may be their strategy to gain a competitive edge in saturated markets and apply innovation to venture into new ones.
  • Chile: Most insurance companies do not possess a robust risk management infrastructure. The regulator recognizes this, and to move the industry to a more sophisticated state, has been working on implementing a Solvency II-type framework since 2005.
  • Mexico:  The insurance business in Mexico has been moving toward a higher level of sophistication. The regulator has pushed for stronger corporate governance and has been very strict with solvency requirements.

We believe that countries can learn from the experiences of others in introducing a risk-based and economic value-based solvency framework.

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