Mercosur-EU trade deal to benefit insurers

The historic Mercosur-EU free-trade deal is expected to have a positive impact on the transportation insurance segment.

After some 20 years of failed negotiations the two blocks announced on June 30 that they had reached a deal, which still needs congressional approval in the Mercosur member states (Argentina, Brazil, Paraguay, and Uruguay) and the EU nations.

The accord is expected to increase agriculture exports from Mercosur to the EU, which in turn will be able to export more industrial products to the Mercosur markets.

"As it involves import and export of several products, one of the main beneficiaries will be transportation insurance," said Salvatore Lombardi, director of the transportation area at Brazilian insurer Argo Seguros and head of the Latin America marine area at its Bermuda-based parent, the Argo Group.

According to estimates by Brazil’s economy ministry, the trade deal will add 336bn reais (US$87bn) to the country’s GDP in 15 years.

"This is another factor that we must evaluate very positively since with more money, the country should be able to invest in works that facilitate the flow of production. This will likely not only involve the transportation business but also other areas such as engineering and guarantees,” said Newton Queiroz, CEO of Argo Seguros.

A specialty insurer, the Argo Group offers transportation, property and civil liability insurance in Brazil.