Evolved insurance

Bolivia

TOGY talks to Gonzalo Kieffer, executive president of Kieffer & Asociados, about how the insurance system supports the hydrocarbons sector in Bolivia and the evolution and development of integral risk management tools and specialised insurance coverage. Kieffer & Asociados has been present for 30 years in Bolivia working with oil and gas clients.

What are the risks of the petroleum sector?
The risks are huge, as the petroleum sector sees the biggest investments. There are risks in terms of operations, goods, employees, construction, third parties and environmental issues. Any type of complication along the production chain will affect sales. It is also important to think about managers and directors. I cannot give you specifics because each task is different.
The law states that this is a risky operation. Therefore, there is a strict civil responsibility. In order to mitigate risks, companies are developing policies through industrial safety tools, risk management and insurance. They need a strategy. Public companies have not updated their Risk Management and Insurance strategies.

Who are your main clients?
Our clients come from the private sector, including operators, construction companies and distributors. We are leaders within this spectrum.

What is the market’s tendency for the development of special tools?
The development of the risk-management concept generated more agile and broad contracts. As a result, there were benefits in terms of costs and compensations, and above all, the control of the accident rate to maintain an efficient risk management system.

What is the role of the sector in designing specialised insurance coverage tools that address the ongoing demands of the oil and gas industry?
The insurance system has always supported the projects and initiatives of the hydrocarbons industry in Bolivia with technically innovative contracts specifically devised for each risk.
In the long term we expect a greater evolution and development of integral risk management, which will be more demanding in terms of services and with digital technology to support its objectives.

What is the state of the current regulatory landscape and its effects on the insurance industry?
The insurance law No. 1883 of June 25, 1998, and its regulations oversee activity. The regulator is the Fiscal Authority of Pensions and Insurance. Thanks to the information requirements based on solvency ratios and transparency the market is healthy and complies with its obligations.

What is the competitive landscape of the insurance market in Bolivia?
The insurance market has been growing at about 5%. Our projection for 2019 was at 12% and it is now at 6-7%. However, growth is dictated by demand and not by industrial growth. The tendency shows that it will stay at 5% for the foreseeable future. Bolivia is the country with the least contribution per capita to the insurance market. Therefore, it is a huge market, but there are cultural and safety issues.

Is the hydrocarbons industry aware of the risks?
They try to be. Some do work with advisors and look for protection. The biggest issues are in relation to people signing contracts without even reading them. People are more cautious. There is a new pattern. There are new rules. New companies are created which do not have the capacity or the right concepts. They destroy costs and prices. You have to be cautious. The NFPA (National Fire Protection Association) guides industrial safety in the oil and gas industry. It helps a lot. Petroleum activities are the most developed in terms of prevention, training, safety, etc. Everything is very specialised.

Is there a difference between international companies and local companies when it comes to risk management?
If Repsol comes in, it follows risk management criteria. There is a significant difference with the public administration, which has not updated its risk management strategies.

Could the private sector shape the government’s approach and policies in this area?
Globalisation is always there. There is a certain force that cannot be ignored. The government has already realised that it does not have the money or technological capacity.
However, it is moving the right way. It is improving even though things are very difficult. We need a shared effort for things to change. It is not only about investments but also about training. The sector cannot be pushed.

What are the objectives of Kieffer & Asociados for 2017 and strategy for the next three-five years?
We have increased our specialty areas; our vision, mission and values are the base of our organisation. We make a constant effort in the formation of our teams to fulfil the requirements of an ever-demanding and more digitalised market.
We have more than 150 employees at a national level distributed in four offices, which encompass Santa Cruz, La Paz, Cochabamba and Tarija. They are able to respond in an efficient and effective manner to the necessities of our clients in terms of risk management, losses and support in terms of contract revision and providing technologically innovative tools. We are constantly improving so we are leaders in the market and are respected by the biggest insurance companies in the world. We work with five of the 10 major international insurance brokers.