Viewpoint: Argentina's insurance market transformation creates opportunities for the sector
The future looks promising for the Argentine insurance sector
The insurance industry in Argentina has changed dramatically over the past 25 years – these changes have transformed the landscape, providing challenges and opportunities for the insurance industry and loss adjusters
When McLarens launched in Argentina 25 years ago, the insurance industry and loss adjusting market were focused on large departments such as residential homes, shops and consortia.
Now, the market offering is very different and covers almost everything from property and transport to more technical specialties, such as public liability, aviation and engineering.
A sea change in the industry happened in 1991 when the National Institute of Reinsurance ceased to exist and ended the state monopoly on reinsurance.
The aftermath of this event allowed international reinsurers to enter the market, bringing with them a wave of innovation, competition and expansion. This sudden influx produced a rapid change in the industry with the arrival of new insurers and reinsurers that established a base in Argentina. Meanwhile, some local companies withdrew while others merged or grew significantly.
Hurdles
The evolution of the market has not been without its hurdles, though, largely intertwined with Argentina’s economic trajectory. Since 1998, Argentina has entered several recessions and subsequently returned to growth. It has both received and defaulted on an International Monetary Fund bailout.
Inflation woes and economic stagnation have posed significant challenges for the industry, hampering the establishment of new businesses that could have further expanded the market.
Moreover, the loss adjusting market for large accounts is concentrated in the hands of a few players. This concentration has restricted competition and has left many firms battling over smaller claims, especially in niches like marine and inland transport.
However, technology offers a significant opportunity for the industry and its firms to gain a competitive advantage. With the rapid advancement in digital tools and methodologies, those agile enough to adapt will lead the pack. And this technological wave is only in its nascent stage. The future, augmented with artificial intelligence (AI), data analytics and other innovations, promises a revamp of operations, interactions and service delivery.
For instance, at McLarens, we are adopting innovative technology such as 3D scanning devices and remote capture tools to quantify losses more accurately where site access is problematic. By broadening claims services, we can include engineering and forensic architectural services in our offer to clients and we can also access technology and modelling tools that would not traditionally sit within a loss adjusting business.
The industry is also reinventing how it collects and distributes data to clients.
Opportunities ahead
When Argentina rebounds from its recent economic challenges, especially with a potential change in government, the insurance industry could be on the cusp of significant growth. This optimism stems from the vast untapped potential waiting to be unlocked after years of a lack of investment.
Technology will be critical. Enhanced data management, use of AI to optimise processes, and better business interaction across the globe will improve the service to large and complex losses.
Moreover, we expect to see more mergers and acquisitions in the loss adjusting market in Argentina as firms look for routes to growth while making efficiencies.
While the Argentine insurance market has had its share of crests and troughs over the past 25 years, the future looks promising. With a return to growth and a greater adoption of technology, the coming years could be a golden era for insurance in Argentina.
Guillermo Sparks is Argentina country manager at McLarens
