While Chile’s insurance market has shown relative success in dealing with the earthquake that ravaged the country in late February, there is much more work to be done in Chile and across the region to make insurance penetration stick, Mario Marcel, head of IDB’s Institutional Capacity and Finance Sector, told BNamericas.

Countries across Latin America and the Caribbean have been rocked by earthquakes and other natural disasters in the first four months of 2010, with a quake in Haiti in January killing hundreds of thousands and causing massive devastation.

“Even Chile, which is among the most developed [in insurance], could do much more, and looking around the region, you don’t have to go to Haiti to find countries with very tiny insurance industries,” Marcel said in an interview from IDB’s office in Santiago, Chile.

“Sometimes there isn’t enough capital or they depend too much on foreign insurance and reinsurance companies, so many countries haven’t been able to develop their domestic insurance industries sufficiently,” he said. “We are assisting countries to find policies and strategies towards this end.”

COMBINING EFFORTS, BUILDING CAPACITY

IDB is working on several efforts to improve government’s risk prevention for their countries’ economies, as well as find appropriate risk management solutions, including contingent credit facilities, which aim to tie risk transfer mechanisms to prevention.

Part of this effort also involves emphasizing the importance of retail and corporate insurance, which shifts liability from the government to citizens and improves prevention efforts.

“If a well-functioning insurance market is in place, this can be handled by the private insurers and the government can focus on other things,” Marcel said.

The full interview with Marcel will be published in this week’s Insurance Perspectives, for subscribers only.

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