Score!
Culture & Compliance in
Latin America’s Hottest Market:
BRAZIL
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Page 1
Our Speakers:
DEBBIE RODGERS
Senior Vice President, Global Risk Management, Aramark
ANGELO COLOMBO
President and CEO, Allianz Global Corporate and Specialty
Moderator:
GEOFFREY PETERS
Managing Director, Willis North America-International
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Page 2
What to Expect
•
•
•
•
•
Challenges dealing with the Brazilian landscape involving a
major event
Brazil as an emerging power but still in a growth mode
Risk Management best practices and the consequences of non
compliance
Industry-specific insurance changes and trends
Program implementation challenges and strategies
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Page 3
Brazil Overview
• 5th largest country in area
• 7th in GDP
US $2.2 trillion
• Population : 200M
• Unemployment : 6%
• US companies operating in
Brazil: more than 200 of
top 500.
• Insurance markets in Brazil
forecasted to grow at an
average rate of 10%.
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Page 4
2014 FIFA World Cup
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Page 5
Scope of Services
• Public Catering Operation – Concessions, commercial display
area, regional items and beer garden
• “Catering Operational Services” - FIFA / LOC staff, Media
Center, volunteer program, youth program and locker room
food and beverage services
• Third Party Restaurant – Cleaning and security crew, stadium
staff
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Page 6
FIFA Confederations Cup
•
June 15 – 30, 2013
•
6 venues
•
Challenges
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No prior business in Brazil
New business partner
Stadium readiness
Stadium infrastructure
Contracts
Protests
Health & safety hazards
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Page 7
2014 FIFA World Cup
FIFA’s Vision:
Develop the game,
Touch the world,
Build a better future.
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Page 8
The Stats
64
33
12
3.5 M
12K – 14K
Matches
Days
Cities
Spectators
Employees to be vetted by FIFA, hired /
trained
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Page 9
FIFA World Cup
•
June 12 – July 13, 2014
•
12 widely spread venues
•
Expectations
 Equipment requirements defined
well in advance
 Larger menu variety (including hot
food items and regional food items)
 Extended beverage service
programme
 Higher speed of service
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Page 10
Risk Assessment
Ref
1
16
18
36
53
71
101
95
105
Category
Likelihood
(high,
medium or
low)
Risk that…
Leading to…
Infrastructure
/Design
Power supply may be interrupted,
inadequate for stadium operations
Potential loss of facilities operation,
inventory, disruption and/or inability
to continue services during the World
Cup
Systems
Insufficient communication tools
available in steady state and
emergencies
Failure to communicate in a timely
manner
Supply Chain
Product is not delivered by suppliers
in accordance with any packaging
guidelines and ARAMARK stds
(packaging, temperature, expired
product)
Food Safety
Improper use or storage of chemicals
Employee/Custo
mer Safety
Potential for operational inefficiencies
Storage area operations do not follow and employee injuries from falling
appropriate storage and usage
objects, slips, trips, manual handling
guidelines
etc.
Medium
Impact
(high,
medium
or low)
Mitigating actions
High
Back-up power supply, water supplies and
contingencies should be developed for such risks.
Develop alternate menus and ready-to-eat foods
(sandwiches). Utilize disposable cutlery, hand
sanitizing stations.
Medium
Provision of adequate communication tools and
communication protocols. Source satellite phones for
any emergencies.
Food waste, operational inefficiencies
and added costs
Low
Medium
Pre-planning, proper communication and mutual
understanding with suppliers on ARAMARK Stds,
supplier contracts, proper insurance indemnifications,
adequate controls in the receiving area
Contamination of food and/or injury to
employees.
Low
Low
Properly label chemicals and train all employees on
use and handling of chemicals.
High
Proper training to ensure proper layout, storage and
racking in warehouse. Lift trucks and pallet jacks
used for movement of boxes etc..
High
Proper recruitment, training and onboarding program,
rewards and recognition program should be developed
and implemented. Expectations on scope of work
should be clearly communicated during recruitment
phase.
High
Develop critical incident plan specific to the venues.
Have an evacuation plan in place for personnel. All
staff should be trained on expectations, roles and
responsibilities during a critical incident. Proper
communications protocols should be established.
High
Low
Untrained, inexperienced,workforce
Injuries to employees and customers
from lack of following proper
procedures and inability to provide a
high standard of service
Security
An act of terrorism, protest, fights,
strikes will occur in the stadiums or
within the general vicinity including
transportation routes etc.
Disruption of operations and potential
injury to employees, clients, and
participants. Disruption to the food
supply and/or restriction of travel
and/or access to stadiums.
High
Epidemic/Pande
mic/BioRisk
Employees, key management staff get
infected by malaria, yellow fever or
dengue in cities known to have these
diseases
Key management staff becoming sick
and unable to work during the World
Cup resulting in operational
inefficiencies
High
High
Vaccinations, increased handwashing and sanitizing,
awareness, training and monitoring of employees,
signage, monitoring of World Health Organization
alerts, back-up contingencies/alternate decision
makers for key management personnel.
Finance
Improper cash handling and security
around deposits
Financial losses, client dissatisfaction High
High
Consider installation of surveillance cameras, proper
accounting protocols, training
Staffing
High
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Page 11
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Page 12
Wednesday, February 26, 2014 / Courtesy of
BusinessInsurance.com
13
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Page 13
Allianz Global Corporate & Specialty
Brazilian Insurance &
Reinsurance Markets
Sao Paulo, February 2014
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Page 14
Brazilian Insurance Market
Insurance & Reinsurance markets have significantly grown over the last years
CAGR 16%
Premium in
BRLm
CAGR 21%
77.498
75,000
66.241
65,000
58.178
55,000
45,000
50.036
2,912
Admitted
4,969
Local
Premium
Ceded
to Reinsurance
2,555
3,878
1,987
3,891
Insurance
Premium
2,310
2,148
69,617
59,808
52,300
35,000
45,578
25,000
2010
2011
2012
2013E
Source: SUSEP
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Page 15
Brazilian Insurance Market
Decreased profitability in reinsurance as complex risks have been
progressively transferred from insurers to reinsurers
Insurance: Claims/Earned Premium
53%
Reinsurance: Claims/Earned Premium
100%
95%
52%
90%
51%
85%
80%
50%
75%
49%
70%
48%
65%
dec/11
jun/12
dez/12
jun/13
dec/11
jun/12
dez/12
jun/13
Source: SUSEP, Terra Brasis Report
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Page 16
New Regulatory Framework
Local
Admitted
Occasional
USD 30m
USD5m
none
40% of treaties
and facultative
none
none
Retrocession to
markets other than
Admitted and
Occasional
None
Yes
Yes
Max book
Retrocession
50%
No limitations
No limitations
Restriction to
insurers
None
None
Cession limited to 10%
of reinsured portfolio,
except surety
Intra Group
restrictions
None*
Limited to 20%
per contract
Limited to 20% per
contract
Minimum Capital
Right of first
refusal
Credit rating
Locally
Mirrors head
Mirrors head office
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established
office
* Intragroup Retrocessions limited to 20% per contract
Page 17
Wording: new regulation increases
complexity
 Only admitted policies allowed
 Standard wording by line of business provided by the insurance regulator (Susep)
 Risks required to be classified under 7 specific lines of business, additional
complexities to create multiline insurance (Susep’s Rule 395)
 Since June 2013, singular insurances are no longer authorized (Susep’s Rule 458)
 Non-standard policy wordings adapted to the needs of the insured through particular
clauses or additional covers can still be used, but must be previously approved by the
regulator, with the corresponding actuarial note (3–4 months)
 Arbitration clause: local legislation requires written agreement by the client
 Portuguese wording prevails in bi-lingual policies / slips
 Susep’s mandatory clauses in slips: insolvency, intermediary, cancellation, law &
jurisdiction
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Page 18
Claims: in line with global practices
 Loss Adjuster must be assigned by the carrier in the local market, renowned
international loss adjusting companies have local representation in Brazil
 Handling process fully aligned with global practices
 Law firms involved in claims litigation must have local representation,
specialized local and global law firms have local offices in Brazil
 Local Reinsurers may enforce claims control
 Large insurers and reinsurers have fully dedicated staff to all lines of business
 Average time of claims settlements, after adjustments:
 Insurers: 30 days
 Reinsurers: 8-10 days
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Page 19
Premium Flow – Option 1
Local Placement
Insured
Taxes
Carrier
Overrider
Total Costs
0%
7,5%
7,5%
+ 2,0% + 0,38%
+ 1,3875%
5% on
cession
8,7675%
0%
5% on
cession
5%
0%
Cost of
Capital
Cost of Capital
100%
Brazil
Reinsurer
Local License
100%
Outside Brazil
3rd Party
Reinsurer
100%
Reinsurer (HQ)
100%
Captive
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Page 20
Premium Flow - Option 2
Local Placement
Taxes
0%
Insured
Admitted Placement
Taxes
Overrider Average Costs
7,5%
7,5%
Overrider
+ 2,0% +
0,38% +
1,3875%
Carrier
Average Costs
7,5%
11,2675%
Cost of Capital
Cost of Capital
80%
+ 2,0% +
0,38% +
1,3875%
5% on cession
8,7675%
Local
Reinsurer
Brazil
80%
0%
5% on cession
5%
3rd Party
Reinsurer
20%
Outside Brazil
80%
0%
Cost of Capital Cost of Capital
Reinsurer (HQ)
0%
100%
CAPTIVE
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Page 21
Premium Flow - Option 3
Local Placement
Taxes
0%
Insured
Admitted Placement
Taxes
Overrider Average Costs
7,5%
7,5%
Overrider
+ 2,0% +
0,38% +
1,3875%
Carrier
Average Costs
7,5%
11,2675%
Cost of Capital
Cost of Capital
40%
+ 2,0% +
0,38% +
1,3875%
5% on cession
8,7675%
Reinsurer 1
Local
40%
0%
Cost of Capital Cost of Capital
Brazil
60%
Reinsurer 2
Outside Brazil
0%
100%
CAPTIVE
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Page 22

DIC/DIL
 Including mandatory local coverage
 Taking local supervisory aspects into consideration,
e.g. minimum local retention
 Administration of local taxes
 Risk based premium allocation
DIC/DIL
US 1
US 2
US 3
Germany
Italy
Austria
Australia
Thailand
Umbrella
Singapore
Policy scope
(limits and conditions)
Geographical territories
Liability
Example
Local policies follow best market standards
 Adequately reflecting and covering client local risk
US
Germany
Italy
Austria
Australia
Thailand
FOS
(optional)
Singapore
Property
Example
Policy scope
(limits and conditions)
International Insurance Programs: solution
for clients with international exposure
Geographical territories
FOS not recommended
Local policies issued dependent on risk and maturity
of market:
 Master cover provides global umbrella
 Harmonized coverage across the program
 Combines best local practice with global
requirements
 Local regulations are complied with (taxes/levies)
 Premium is allocated in relation to localrisk and
exposure




Pooling of local policies via reinsurance *)
Harmonizing overall coverage by including
local companies under the Master in DIC / DIL
Captive fronting based on client needs
Potential sharing of risks with a panel of
coinsurers / reinsurers
* to the degree legally permitted
Questions, Final Comments and
Contact Information
ANGELO COLOMBO
GEOFFREY M. PETERS
President and CEO
Allianz Global Corporate & Specialty
email: angelo.colombo@allianz.com
Managing Director
Willis North America - International
email: geoffrey.peters@willis.com
DEBBIE RODGERS
SVP, Global Risk Management
Aramark Corporation
email: rodgers-debbie@aramark.com
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Page 24
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