Mexico can bring Prosperity Brokers' Portfolios
By Jim Labelle, Mexico Insurance Professionals
In the past most opportunities for US brokers in Mexico have been personal lines. US agents and brokers are finding more and more clients and prospects with Commercial exposure in Mexico.
The possibilities for agents and brokers have increased as a result of the implementation of the North American Free Trade Agreement and the relaxation of Mexico's foreign investment laws.
Mexico, whose border with the US is nearly 1500 miles long, is now the United States' third largest trading partner. Mexico's labor force is strong, young, and cost efficient. Thousands of American companies have taken advantage of the benefits of operating in Mexico, with millions of dollars worth of goods and thousands of vehicles crossing the border each day.
American companies and individuals with exposure in Mexico are best served by continuing to work with their US agent or broker. There is no reason for agents to risk losing clients, potential clients, or control of a portion of an account because they cannot handle exposures in Mexico. In fact, many US agents find themselves with opportunities to handle the US portion of an account as a result of having been the only producer to offer to review the clients Mexico insurance program.
The advent of Internet technology and sophisticated communications such as fax and email gives clients virtual access your office from anywhere in the world. Clients with exposures in Mexico would certainly prefer to work with their US agents, who understand the clients, share their sense of urgency and are accustomed to providing excellent customer service.
Agents and brokers can access the Mexican insurance market by using one of a handful of specialty wholesalers in the US who are contracted directly with Mexican insurers and have affiliate broker relationships in Mexico. These wholesalers provide coverage for American corporations and individuals with exposure in Mexico and are familiar with the Mexican market.
Opportunities for US agents and brokers in Mexico are the result of several factors:
The influx of US capital and management in the Mexico tourism industry has been substantial, enabling US-based corporations to develop and manage hotels, recreational vehicle parks, condominium complexes, and other services.
The growth of the maquiladora industry has been phenomenal. More and more US corporations are moving production facilities to both Mexican border cities and mainland Mexico.
Millions of dollars of goods cross from the US to Mexico, and vice versa, on a daily basis. This trade has greatly increased the need for broad, compatible cargo/transportation and commercial trucking coverage for both US truckers and shippers operating in Mexico, and Mexican truckers delivering finished goods to warehouses in the US.
The US corporations renting vehicles and equipment in Mexico have proliferated. In particular, car rental agencies and heavy machinery lessors have increasing exposure in Mexico, requiring foreign property and liability coverage.
Infrastructure improvements are prompting greater numbers of US-based contractors to perform work there.
Hundreds of thousands of US executives, tourists, retirees, and expatriates travel to and own homes in Mexico. These clients need personal lines and specialty health, medical, and emergency evacuation coverage in Mexico in addition to legal aid services, which can be purchased as an endorsement on most Mexican liability policies.
The risk of accidents or health problems exists anywhere. There is a need for specialty international group benefit plans for US workers and tourists who frequently travel outside he US. This opportunity is truly International and not limited to Mexico.
Issues US agents and brokers, placing coverage in Mexico, should be aware of include:
Mexican law requires that primary insurance in Mexico be placed with an admitted Mexican Insurer. Although difference-in-condition coverage is available from US carriers, the primary coverage must be placed with an admitted Mexican company.
Mexican policy forms and terms and conditions are often quite different from those for corresponding US coverage. Be sure to obtain English translations of all policy forms prior to binding coverage. In addition, brokers should negotiate with Mexican insurers to attempt to match US coverage forms.
Approximately 50 insurers are admitted in Mexico. With the relatively small number of insurers in Mexico, the financial strength and service standards of Mexican underwriting companies varies dramatically. Interestingly, many US insurers with Mexican operations have only a handful of employees in Mexico and may not provide the same level of service, risk management, and coverage lines as Mexico's largest insurance companies.
The Mexican market is property driven. In fact, one of the most difficult coverages to place in Mexico today is transit/cargo coverage. Liability exposure as we know it in the States does not exist in Mexico.
Although Mexico has had an impressive comeback from the Peso crisis of a few years ago, the potential for Peso fluctuation remains. Therefore, all policies should be denominated in US dollars.
Our neighbor to the South provides unlimited opportunities for US agents and brokers--not only to round out accounts, but also to develop new business opportunities.
Jim Labelle is president of International Insurance Group, Inc., a wholesaler specializing in all types of coverage for Mexico as well as group and individual international health and medical benefit programs. He is based in Flagstaff, Arizona Telephone: (855) 639-7761.