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 Business News | June 2006 
Disaster Insurance in Mexico to Rise
 Associated Press
| | "Prices for catastrophic coverage are going to increase substantially in Mexico." |
Mexico City - The cost of insurance coverage against hurricanes and other meteorological risks will rise dramatically following last year's record hurricane season, according to re-insurers who picked up most of the tab from the storms.
Mexican insurance companies will end up paying as much as four times more for reinsurance - essentially, risk-sharing contracts sold to insurance companies - on disaster policies, industry sources said.
"Prices for catastrophic coverage are going to increase substantially in Mexico," said Horst Agata, chief executive for the Mexican office of reinsurer General Re Corporation, or Gen Re. "Increases could reach up to 300 or 400 percent," he said.
Carlos Boelsterli, chief executive of the Swiss Reinsurance Co. Mexico office, said the 2005 hurricane season, Mexico's most expensive ever, had convinced some companies they had underestimated risks of potential storm damage.
"Our recent experience showed that we had underestimated our exposure to meteorological risk in a big way, which has led us to recalibrate our models," Boelsterli said in an e-mailed response to questions.
About 80 percent of Mexican insurers renew their reinsurance contracts July 1 for the following 12-month period.
In 2005, Hurricanes Emily, Stan and Wilma caused US$2.27 billion (euro1.8 billion) of insured claims in Mexico.
Up until then, 2002 held the record, when Hurricanes Isidore and Kenna cost insurers about US$440 million (euro348.3 million), of which reinsurers paid 90 percent.
Mexico's insurance association AMIS, reported that insurers are also raising their prices for policies sold to customers.
The 2006 reference rate to insure beachfront property and assets against weather-related damage saw increases in the premiums charged to the end customer of 400 percent in some cases, according to AMIS.
Mexico: Paying Back $7 Billion Of Debt
stratfor.com
Mexico will pay back $7 billion of debts with the World Bank and the Inter-American Development Bank using the international reserves of the central bank (Banco de Mexico), which have soared to more than $77 billion, Mexican Deputy Finance Secretary Alonso Garcia Times said June 22. The Mexican government will issue peso-denominated bonds to buy the necessary reserves for the payment, which will reduce Mexico's debt with those two organizations to more than half of what it currently is. After this payment, Mexico's government foreign debt will be equivalent to only 6.4 percent of gross domestic product. |
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