Reporter was commissioned to write this in-depth article.
A decade ago,setting up satellite offices in South Florida wasn’t especially common for insurance companies. Then again, the Latin American economic landscape looked very different 10 years ago.
The last decade has reflected booming economic changes throughout Latin America. Chile, Panama, Costa Rica and Peru are especially thriving, according to World Economic Forum’s most recentGlobal Competitiveness Report. These emerging markets have, in turn, directly impacted U.S. business.
“Miami is the financial capital of Latin America in many ways,” said Raul Hinojosa-Ojeda, an associate professor in the UCLA Department of Chicana and Chicano Studies. “The boom in Latin America has created huge growth in the southern Florida economy in general.”
According to Hinojosa-Ojeda, many insurance companies, banks, and debit/credit processing operations are all operating out of Miami in order to service Latin America. In general, Latin America is also a huge trading partner for the United States.
“If you look at the top 20 percent of the income scale, they’re a very lucrative target population, particularly for U.S. financial products like insurance, real estate and other types of credit and savings products,” said Hinojosa-Ojeda. “In a lot of ways, that amplifies even more the economic boom in Latin American demand for U.S. services.”
The insurance business is one that has been specifically affected by Latin American growth.
“Most of the insurance companies and intermediaries that moved to Miami did so after 2004, which was about the time AIG, a market leader, decided to relocate 60 people from New York down to their Latin American Division to Miami,” said Bobby Vernon, founder and CEO of Dual Specialty Underwriters. “Since then, over two dozen companies have moved to Miami, creating a relatively robust insurance market all focused on the Latin American and Caribbean territories.”
Why Miami? The attraction is multilayered. In addition to being a quick, direct flight from Latin American countries, South Florida is a culturally rich area. Many Miami residents also speak Spanish or Portuguese, which is certainly an advantage. Doing business in Miami is equally appealing to Latin American businesses, many of which are looking to establish new relationships in the United States.
“In 2000, Latin America was mostly a property insurance market with very few focused on specialty insurance,” said Vernon. “Distribution was highly inefficient and there wasn't much of a wholesale intermediary channel or professionals who knew much about specialty lines of insurance.”
According to Vernon, the market needed specialists with product knowledge to help it grow.
“I felt with product knowledge, Spanish language skills, and operating locally in Miami, there was an opportunity to create a new distribution model and change the market,” he said.
Vernon began offering specialty liability insurance, the demand for which has grown tremendously over the last decade.
In the past 10 years, many other insurance companies have followed suit and set up shop in Miami. Two years after AIG established a presence there, Liberty International Underwriters also set up offices in Miami, Brazil and Puerto Rico. Since then, other large companies including Zurich, Hiscox, Ironshore and others have all done the same.