New openings for insurance in Colombia

What shifts are occurring in the global insurance sector, and what impact could those have on Colombia?
The change in the global insurance industry is something that will definitely affect the oil and gas insurance sector in Colombia in years to come. A large number of insurance companies are merging, in addition to the general tightening up of regulations in this area, which will eventually make prices go up.
From here, the reduction of this sector worldwide will have an impact on Colombia because there is no real capacity in local insurance companies for oil and gas, so most of it goes to reinsurance. If reinsurance prices go up, then local companies in the oil and gas sector will be impacted.
In any case, these changes will certainly have an impact on the local market. They will also result in an opportunity for those companies that have good risk management procedures in place, while those that don’t might suffer the consequences.

In which areas is demand for insurance increasing?
One area that is creating a need for more insurance is the tightening of environmental regulations. In transport and maritime in general, we see more cases where authorities are tightening up regulations through fines and penalties when they find there is a breach of environmental laws or licensing.
On this note, we have had a problem over the past few years with delays in obtaining environmental licences. Hopefully this will change soon.
There is also the issue of whether or not there will be licences for fracking. If the authorities allowed the exploratory process to start, that could be a huge opportunity for Colombia. I think the environmental part of that will create needs for specific products and, of course, new policies.

Could Colombia potentially become an insurance hub?
The country may go that way. However, at the moment, the real capacity from an insurance sector point of view is not in Colombia, but rather in hubs such as Houston or London. Other countries within the region such as Brazil, Mexico and Argentina also have big and growing insurance industries when it comes to oil and gas.
In Colombia, we have seen this sector fluctuate due to the recent oil price crisis. In spite of this, we continue developing this sector, as we consider it not only mature, but also full of potential.

What challenges do investors face when entering the Colombian oil and gas market?
In general terms, we see more E&P activities, evidenced through the increasing needs of clients to insure their drilling equipment. But, it is less than we expected. We hope that with the new government, this sector will gain momentum and create more business opportunities.
Many issues are still in the air that may affect the confidence of investors coming into the country. One of them is the uncertainty in the legal framework, which has created a general lack of confidence for both potential investors and those already established in Colombia.
Another important issue is taxes. It will be important to consider how investors and potential investors will react to the new tax reforms regarding the oil and gas sector and beyond. At the end of the day, companies want clearly established rules that provide medium- to long-term stability, not regulations that change every few years.

Is there a demand for increased cyber security in Colombia’s oil and gas industry?
The country has set policies addressing cyber issues such as property damage due to the proliferation of cyber attacks. In the oil and gas industry in particular, this is an area that is very important, not only for refining, but also for transportation. It is evident that the industry is turning towards new technologies, but the more digital it goes, the more exposure it has to hacking.

What importance does Willis Towers Watson place on technology?
Technology is probably one of the areas where we have invested the most in past years, with close to COP 12 billion [USD 3.81 million] for tools that will help our clients be more effective in the management of their risk and insurance needs. We can now bring the clients online and have real-time information about their insurance products, not only on the computer, but also through mobile devices.
Over the past couple of years, we have also developed advanced analytical tools and systems together with our UK and US offices. From here, we can produce valuable management information for the clients that allows them to make informed decisions. Risk managers can also explain to their boards the rationale behind their decisions in a more informed way.

What significance does the Colombian market have in Willis Towers Watson’s operations?
Colombia is the third-largest regional market in terms of our operations, after Brazil and Mexico. The fact that the dynamics and pace of growth here are higher than in other countries has caused our operations to increase substantially. We are also increasing our presence in the corporate sector, which is very important for us at the moment.

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