The Latin American captive insurance industry has the potential to grow substantially — and Bermuda is well positioned to benefit.

That is the view of Jorge Luzzi, president of ALARYS (Asociacion Latinoamericana de Administradores de Riesgos y Seguros) and group risk manager of the Pirelli Group.

"The Latin American captive market is still growing," Mr. Luzzi said in an interview with The Royal Gazette. "It's only five to ten percent of what it can be.

"There are still many companies who do not fully understand the benefits of having a captive and the first step is to convince risk managers of the benefits. That is why conferences like this (the ALARYS Congress) are necessary."

The Congress opened yesterday at the Fairmont Southampton hotel and has attracted delegates from 17 countries, including a strong presence from South American economic powerhouses Brazil and Argentina.

Captives provide self-insurance to their parent corporations and Bermuda is the world-leading jurisdiction in terms of the number of captives domiciled here.

The Latin American economy has great growth potential, Mr. Luzzi said.

"Brazil is one of the biggest economies in the world and it is the locomotive of Latin America at this time," Mr. Luzzi said.

"There is some political instability in some countries, but some, like Panama, are doing very well and making big growth steps."

Growth in Mexico had been impacted by the slowdown of its biggest trading partner, the United States, he added, but a recovery there was expected soon.

Asked why ALARYS had brought the conference to the Island, rather than a Latin American country, Mr. Luzzi said: "First, Bermuda is one of the most important insurance, reinsurance and captive markets in the world. We consider that to be very important.

"Also, Bermuda has supported ALARYS activities ever since its creation [in 1993]. That was an act of faith.

"Today we are a very consolidated risk management association and Bermuda and its Government have always been with us."

The Bermuda Insurance Management Association (BIMA), an organisation representing captive managers on the Island, joined ALARYS in 2003 and the following year the Island hosted the ALARYS Congress for the first time.

Premier Ewart Brown attended the last ALARYS Congress in Buenos Aires two years ago.

The contact was maintained when Finance Minister Paula Cox met with ALARYS officials at the Risk and Insurance Managers' Society (RIMS) annual conference in Boston earlier this year.

Mr. Luzzi's company Pirelli, the Italian multi-national tyre manufacturer, has had a captive in Bermuda since the mid-1980s. He said the company had received some criticism from those in Europe who regard Bermuda as a tax haven and the captive as a means of cutting the company's tax bill.

"The captive does not exist because of tax," Mr. Luzzi said.

"It's a real risk management tool. But sometimes the perception of the world is that Bermuda is a fiscal paradise. That is changing slowly."