Monday, 12 December 2011
Don’t be fooled by common language in Brazil
Language may not be a big barrier for Spanish companies that are trying to make a splash in the fast growing Brazilian market. But the similarities between Spanish and Portuguese are of little help when it comes to compliance and the wording of insurance contracts in South America’s biggest country.
Bruno Laval, the Regional Manager for Iberia and Latin America at XL
Speakers during the Latin America Risk Frontiers seminar organised by CRE in Madrid last month stressed several times how necessary it is to understand the peculiarities of Brazilian insurance contracts. Legislation is complex and it is not unusual that rules change at very short notice.
Speakers and delegates noted, for instance, that efforts by the authorities to implement standards for contracts mean that wordings are inflexible and difficult to adjust to the specific needs of large insurance buyers.
To make matters even more difficult, Brazilian tax legislation, which has a big impact on insurance contracts, is widely acknowledged as one of the most arcane in the world.
According to the World Bank, Brazil is the country where companies spend the most time trying to comply with tax laws.
“It is a pain,” remarked Bruno Laval, the Regional Manager for Iberia and Latin America at XL, on the issue of compliance in Brazil.
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Brazilian lawmakers also have a tendency to ignore rules adopted in other jurisdictions. This makes it necessary, for example, for companies to buy local insurance policies to complement their carefully constructed global programmes.
“The support of local expertise can help to deal with the challenge of complying with Brazilian rules,” said Victor Garibaldi, the Corporate Clients Director at broker MDS Brazil, part of the fast-growing Portuguese/Brazilian broking group.
But insurance companies face other difficulties in the country.
Hiring the best talent is a tough task, as professionals with the right skills are hard to find and as a result are much in demand by local players and the many foreign firms that have set up shop in the country. As a result, salaries are very high and fidelity to companies is basically non-existent, Mr Laval said. “XL pays in Brazil wages that are much higher than what we pay here in Spain,” he remarked.
But Mr Laval also talked about the huge opportunities that Brazil offers today and gave some examples of why insurers will remain interested in the country despite the difficulties it offers. “There are plans to build 50 hydroelectric power plants in Brazil in the next five years,” he said. “If only half of those projects go ahead, it is a lot already.”
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