Portugese risk manager António Fernandes of Apogeris comments on Brazil’s evolving risk profile

In light of new laws in Brazil aimed at protecting local industry, Antonio Fernandes, president of Portugese risk management association Apogeris, explains the implications for risk managers.

Fernandes, who is also head of risk management for MDS, a division of Portugese corporation Sonae, believes that Brazil’s new approach to manufacturing is a direct result of stiff competition from Chinese, Korean and Russian companies. The incentives and tax breaks involved in the plan will give Brazil’s manufacturers a boost.

“Increased production means that companies will have to buy new equipment and acquire more raw materials which will have an impact on the insurance programmes. Risk managers will need to review the new risks exposures and it’s likely that they will have to increase the insured limit for property and casualty,” said Fernandes.

Regarding the impact on Brazil’s insurance market, as a result of a new Brazilian law that mandates placement of 40% of reinsurance business with local reinsurers, Fernandes said: “We do not see any immediate effect on the insurance market but problems may arise if the local insurance/reinsurance capacity is not high enough to cover the new risks.”

In spite of the difficulties that may arise in the reinsurance market Fernandes sees the Brazilian market as a huge opportunity for foreign companies. “Brazil is and will be more a country of opportunity for investors, reinsurers and the business community in general.”

However, he believes that Brazil may suffer from a lack of highly skilled workers in certain key sectors. “The country may be faced with a lack of specialists in engineering and an insufficient energy supply. It may have to import specialist workers from neighbouring countries.”

For more analysis of Brazil’s new industrial policy click here.