score! culture & compliance in latin america’s hottest market: brazil

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Score!Score! Culture & Compliance in

Latin America’s Hottest Market: BRAZIL BRAZIL


Our Speakers: DEBBIE RODGERSDEBBIE RODGERS Senior Vice President, Global Risk Management, AramarkSenior Vice President, Global Risk Management, Aramark

ANGELO COLOMBO ANGELO COLOMBO President and CEO, Allianz Global Corporate and SpecialtyPresident and CEO, Allianz Global Corporate and Specialty

Moderator: :

GEOFFREY PETERSGEOFFREY PETERSManaging Director, Willis North America-InternationalManaging Director, Willis North America-International


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


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%.


2014 FIFA World Cup


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


FIFA Confederations Cup• June 15 – 30, 2013

• 6 venues

• Challenges No prior business in Brazil New business partner Stadium readiness Stadium infrastructure Contracts Protests Health & safety hazards


2014 FIFA World Cup

FIFA’s Vision:Develop the game,Touch the world,Build a better future.


The Stats

646433331212

3.5 M3.5 M12K – 14K12K – 14K

MatchesDaysCitiesSpectatorsEmployees to be vetted by FIFA, hired / trained


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


Risk AssessmentRef Category Risk that… Leading to…

Likelihood (high,

medium or low)

Impact(high,

medium or low)

Mitigating actions

1

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 High 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.

16 Systems

Insufficient communication tools available in steady state and emergencies

Failure to communicate in a timely manner Low Medium

Provision of adequate communication tools and communication protocols. Source satellite phones for any emergencies.

18 Supply Chain

Product is not delivered by suppliers in accordance with any packaging guidelines and ARAMARK stds (packaging, temperature, expired product)

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

36 Food Safety Improper use or storage of chemicalsContamination of food and/or injury to employees. Low Low

Properly label chemicals and train all employees on use and handling of chemicals.

53

Employee/Customer Safety

Storage area operations do not follow appropriate storage and usage guidelines

Potential for operational inefficiencies and employee injuries from falling objects, slips, trips, manual handling etc. Medium High

Proper training to ensure proper layout, storage and racking in warehouse. Lift trucks and pallet jacks used for movement of boxes etc..

71 Staffing Untrained, inexperienced,workforce

Injuries to employees and customers from lack of following proper procedures and inability to provide a high standard of service High 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.

101 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 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.

95

Epidemic/Pandemic/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.

105 FinanceImproper cash handling and security around deposits Financial losses, client dissatisfaction High High

Consider installation of surveillance cameras, proper accounting protocols, training

Recording of this session via any media type is strictly prohibited.13

Wednesday, February 26, 2014 / Courtesy of BusinessInsurance.com


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Allianz Global Corporate & Specialty

Brazilian Insurance & Reinsurance Markets

Sao Paulo, February 2014


Brazilian Insurance Market Insurance & Reinsurance markets have significantly grown over the last years

Insurance Premium

Premium Ceded to Reinsurance

Local

Admitted

50.036

58.178

66.241

77.498

CAGR 16%

CAGR 21%

Premium in BRLm

Source: SUSEP


Brazilian Insurance Market Decreased profitability in reinsurance as complex risks have been progressively transferred from insurers to reinsurers

Source: SUSEP, Terra Brasis Report


New Regulatory FrameworkLocal Admitted Occasional

Minimum Capital USD 30m USD5m none Right of first refusal

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

Credit rating Locally established

Mirrors head office

Mirrors head office

* Intragroup Retrocessions limited to 20% per contract


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


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


Carrier

3rd Party Reinsurer

Reinsurer (HQ)

Brazil

Outside Brazil

Taxes Overrider Total Costs

0% 7,5% 7,5%

+ 2,0% + 0,38% + 1,3875%

5% on cession 8,7675%

0% 5% on cession 5%

Premium Flow – Option 1

Insured

Reinsurer Local License

0% Cost of Capital Cost of Capital

Captive

Local Placement

100%

100%

100%

100%


Carrier

3rd Party Reinsurer

Reinsurer (HQ)

Taxes Overrider Average Costs+ 2,0% + 0,38% + 1,3875%

7,5% 11,2675%

Premium Flow - Option 2

Admitted Placement

Local Reinsurer


CAPTIVE

0% 7,5% 7,5%

Average CostsTaxes Overrider

Local Placement

+ 2,0% + 0,38% + 1,3875%


0% 5% on cession 5%


Brazil

Outside Brazil

Insured

20%

80%

80%

80%

100%


Carrier

Reinsurer 2

Taxes Overrider Average Costs+ 2,0% + 0,38% + 1,3875%

7,5% 11,2675%

Premium Flow - Option 3

Admitted Placement

Reinsurer 1 Local


CAPTIVE

0% 7,5% 7,5%

Average CostsTaxes Overrider

Local Placement

+ 2,0% + 0,38% + 1,3875%



Brazil

Outside Brazil

Insured

60%

40%

40%

100%

International Insurance Programs: solution for clients with international exposure

Geographical territories

Polic

y sc

ope

(lim

its a

nd c

ondi

tions

)

Geographical territories

Polic

y sc

ope

(lim

its a

nd co

nditi

ons)

Captive fronting based on client needs

Harmonizing overall coverage by including local companies under the Master in DIC / DIL

Local policies follow best market standards

Administration of local taxes

Taking local supervisory aspects into consideration, e.g. minimum local retention

Including mandatory local coverage

Adequately reflecting and covering client local risk

Risk based premium allocation

Potential sharing of risks with a panel of coinsurers / reinsurers

Pooling of local policies via reinsurance *)

Sing

apor

e

DIC/DIL

Germ

any

Italy

Aust

ria

Aust

ralia

Thai

land

US

1U

S 2

US

3

Umbrella

Property Example

Liability Example

Sing

apor

eDIC/DIL

Germ

any

Italy

Aust

ria

Aust

ralia

Thai

land

US

FOS(optional)

Germ

any

Italy

Aust

ria

FOS not recommended

* to the degree legally permitted

Local policies issued dependent on risk and maturity of market:Master cover provides global umbrellaHarmonized coverage across the programCombines best local practice with global requirementsLocal regulations are complied with (taxes/levies)Premium is allocated in relation to localrisk and exposure


Questions, Final Comments and Contact Information

GEOFFREY M. PETERSManaging Director

Willis North America - Internationalemail: [email protected]

ANGELO COLOMBOPresident and CEO

Allianz Global Corporate & Specialtyemail: [email protected]

DEBBIE RODGERSSVP, Global Risk Management

Aramark Corporationemail: [email protected]

mailto:[email protected]




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score! culture & compliance in latin america’s hottest market: brazil

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