In recent weeks, Javier Milei once again put on the table an idea that until recently seemed marginal within the Argentine economic discussion: the need for an “insurance revolution.” The phrase is not minor. And it should not be interpreted as an exclusively technical or sectoral discussion. Because when we talk about insurance, we are actually talking about something much deeper: we are talking about how a society manages its risks. And there appears the real underlying discussion: are the risks absorbed by the State through public spending, deficits and taxes? Or are they managed by the private sector through savings, capitalization and insurance coverage?
That is the real debate. For decades, Argentina built a model where a large part of the social, economic and patrimonial risks ended up directly or indirectly nationalized.
- Health problems.
- Work accidents.
- Property damage.
- Old age.
- Inability.
- Catastrophes.
- Lack of pension savings.
- Litigation.
Even a large part of the imbalances derived from economic informality. Everything ended up, in one way or another, impacting public spending. The result was a model where the State ended up functioning as an insurer of last resort… but without premium, without reserves and without solvency. And when a system promises to cover risks without technical financing, what Argentina knows all too well inevitably appears:
deficit, inflation, tax pressure and institutional deterioration.
That is why the discussion about insurance is not a corporate discussion. It is a macroeconomic discussion. Developed countries understood decades ago that insurance plays a central role:
transform uncertainty into predictability. And that predictability allows something fundamental: rreduce the need for permanent State intervention.
A modern insurance system:
- protects people;
- reduces litigation;
- encourages savings;
- channels investment;
- develops capital markets;
- and reduces future fiscal pressure.
That is why it is no coincidence that the most developed economies have deeply sophisticated insurance markets. Life insurance, for example, is not only coverage in the event of death.
It is a tool for family stability, asset protection and long-term savings. In many countries, life and retirement insurance are one of the main drivers of the capital market and productive investment.
Because they generate stable, predictable and long-term funds. Argentina, on the other hand, historically destroyed long-term savings:
- inflation;
- monetary instability;
- regulatory excess;
- investment restrictions;
- and obsolete regulatory frameworks.
The result is evident: a small insurance market for the potential size of the Argentine economy. The same goes for health insurance. While the public system is increasingly stressed and social and prepaid works face structural problems, insurance can be transformed into a modern tool for organizing health risk.
But this requires abandoning the defensive and regulatory logic of the 1970s to move to a model based on competition, solvency, innovation and contractual freedom. The insurance revolution implies just that:
understand that insurance is not a bureaucratic cost or a formal requirement. It is a tool of economic development. And also a tool of freedom. Because a society that can better manage its risks depends less on political power to resolve each crisis.
When a family has property coverage, life insurance, pension savings and access to private protection mechanisms, its vulnerability to the State decreases. And that completely changes the economic architecture of a country. That is why the discussion on the reform of the Argentine insurance system cannot be limited to regulatory technicalities. It is not only about modifying articles of laws written more than fifty years ago, but to redefine the role of insurance within the Argentine economy of the future.
A modern system should:
- promote risk-based solvency;
- facilitate innovation;
- enable global competition;
- stimulate savings;
- develop health, retirement and life products;
- reduce litigation;
- and turn the insurance market into a true long-term institutional investor.
In short: the insurance revolution is not only about modernizing an industry. It consists of progressively replacing unproductive public spending with private mechanisms for efficient risk management. And perhaps therein lies the most important point of all. Because when Milei talks about an insurance revolution, he is actually talking – although many still do not realize it – about a much deeper transformation: going from a State that promises to cover everything… to a ssociety capable of better protecting itself.
*Public accountant, specialist consultant in insurance and transportation. Former national undersecretary of Transportation and official at SSN.
by José Manuel Urdiroz
