Colombia's total gross written premium (GWP) is projected to reach $8.9 billion this year and grow to over $11.5 billion by 2028, signifying its rise as a significant and expanding insurance market. In this special additional episode of “The Standard Formula,” host Rob Chaplin is joined by colleague Caroline Jaffer explore Colombia's prudential solvency regime, building on their recent episodes focused on Central and Latin America. They examine the regulatory role of the Superintendencia Financiera de Colombia (SFC), Colombia's alignment with international standards through IAIS membership and the country's gradual shift toward a risk-based capital model. Rob and Caroline also discuss progress toward Solvency II adoption, technical reserve requirements and cross-jurisdictional reinsurance rules through the REACOEX registry. 🗝️ Key Points 🗝️Top takeaways from this episode Colombia's Insurance Regulatory Framework: Colombia's insurance sector is regulated by the SFC, which holds wide-ranging powers for licensing, supervision, consumer protection and regulatory enforcement. The Ministry of Finance also retains policymaking authority over the broader insurance sector.Shift Toward Risk-Based Capital: Since 2010, Colombia has been gradually shifting towards a risk-based solvency framework. Insurers now calculate required capital based on asset risks, underwriting risk and other exposures, with the minimum capital required to be comprised of paid-in capital, reserves and retained earnings.Progress Toward Solvency II Adoption: Colombia is working toward a more extensive adoption of Solvency II, encompassing not only quantitative capital requirements but also governance, risk management, reporting and transparency. One challenge has been the availability of data, leading the Colombian government to foster capacity-building within the insurance sector to ensure an ordered transition.Cross-Jurisdictional Reinsurance and the REACOEX: Domestic insurers may cede risk to foreign reinsurers, provided those reinsurers are registered in the REACOEX — the SFC's public registry for foreign insurers and reinsurance intermediaries. 💡 Meet Your Host 💡Name: Robert Chaplin Title: Partner, Insurance at Skadden Specialty: Rob primarily focuses on transactional and advisory work in the insurance sector. He advises on mergers and acquisitions, disposals, joint ventures and strategic reinsurances. He also counsels on regulatory issues, with an emphasis on Solvency II. Connect: LinkedIn 💡 Featured Guest 💡Name: Caroline Jaffer What she does: Caroline has extensive experience working on insurance matters and liaising with regulators in both the U.K. and internationally, having practised in both the U.K. and the Middle East. Organization: Skadden Words of wisdom: "Colombia has increasingly aligned its supervisory and prudential systems to international standards in recent years. The SFC became a member of the International Association of Insurance Supervisors, or IAS, Multilateral Memorandum of Understanding in 2022. Accordingly, Colombian regulation follows all their guidelines specifically regarding prudential supervision, market conduct, corporate governance and risk management." Connect: LinkedIn Connect with Skadden☑️ Follow us on X and LinkedIn. ☑️ Subscribe to The Standard Formula on Apple Podcasts, Spotify, or your favorite podcast app. The Standard Formula is a podcast by Skadden, Arps, Slate, Meagher & Flom LLP, and Affiliates. This podcast is provided for educational and informational purposes only and is not intended and should not be construed as legal advice. This podcast is considered advertising under applicable state laws.
