Ever wondered what could boost your insurance sales? Apparently, a rash of corruption could be the key.
That, at least, is the case in Brazil where there has been a leap in business thanks to a corruption probe that involves a host of corporate bankruptcies and the state-controlled Petroleo Brasileiro SA.
According to a report by
Reuters, the market for Directors & Officers policies has more than doubled in value during the last five years with the volume on premiums paid hitting $114 million last year. The policies, which are designed to cover senior executives against the decisions they take, normally include legal bills linked to criminal investigations – although the insurer can demand repayment if the defendant is convicted and criminal intentions are proven.
Brazil has seen a massive uptake partly thanks to the probe into Petrobas, as well as a significant recession in the country. It’s common for bankruptcies to prompt a host of action against companies and their executives, including for environmental liabilities, labour and tax.
However, it seems the uptick in claims has also caught some insurers off-guard. The publication reports that
Zurich witnessed its claims actually surpass its premiums by 53% last year; while some insurers have taken action including barring particular firms with significant financial problems and those that have obvious links to corruption probes – the report suggests that government contracts have become especially difficult to insure.
Still, the market is expected to expand by at least 15% on an annual basis – with the likes of
Chubb set to benefit. It secured around 55% of Brazilian Directors & Officers premiums when it bought Itau Unibanco’s large corporate risk portfolio in 2014. Other players in the market include
AXA and Traveler’s of the USA.
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