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Colombia 2013 | FINANCE | VIP INTERVIEW

TBY talks to Ignacio Borja Noboa, President of Allianz, on the strong growth potential of the Colombian insurance market.

Allianz operates in over 70 countries worldwide. What does Colombia represent to the company's overall business activity?

We first arrived in Colombia in 1999 through a takeover, and over a period of two years we completed the acquisition process. We decided to enter the Colombian market because we saw it as strategic for the entire region, which today shows the strongest and most sustained growth in the world. Overall, I would say that Colombia, along with Brazil, is one of the two main markets for our company in Latin America. For example, in Colombia we will close 2012 with over 20% growth if analyzed in terms of the three or four main segments in which we operate: 40% in motor, over 30% in life, and 15% in health. Our predictions show that the sector will continue to grow at a fast pace over the next five years. In addition, we can talk about a general phenomenon in the entire region, which is particularly affecting Colombia; the low penetration rate of insurance products. In Colombia, the insurance penetration rate is around 1.8% of GDP, and this figure is very low when compared to other countries in the region. For example, in Chile the figure reaches 4% of GDP. I believe this situation perfectly explains why today the region and Colombia are rapidly developing. Overall, we have to keep in mind that Colombia is among the top-three economies in the region, enjoys a very stable political and legal framework for investors—one of the highest in Latin America—and has a large population in constant demographic expansion. Colombia has changed over the last decade and Allianz sees this country as a leading economic power in the region. Also, there are plenty of opportunities for a worldwide company like ours, whose financial strength and products are highly recognized internationally. It is a win-win situation for both parties, for we contribute to further generate value-added to each party.

What was the business strategy behind the rebranding exercise of Colseguros, a company that today operates under the Allianz name?

Allianz is a company highly committed to respecting the local markets where it operates or plans to enter. In this regard, we took our time to understand the cultural heritage and working culture of Colseguros as part of our process of better understanding the markets in which we operate. Such a move was highly appreciated by the Colombian market, and along with our strong commitment to the development of the country, put us in a favorable position. It took us around 12 years to complete the process, and that speaks out on its own about our intentions in Colombia.

“Allianz is a company highly committed to respecting the local markets where it operates or plans to enter."

How has the company's product portfolio evolved over the last five years, and what kind of products has Allianz brought into the Colombian market?

It is hard to trace an evolution of our product portfolio, because we have to keep in mind that the levels of product innovation in our industry are limited. Overall, I can tell you that we differentiate ourselves from our competitors by our attitude. We believe that the market can expand because there is an insurance culture in Colombia that differs from what most of the people think and it is just a matter of making the products accessible to consumers and creating effective distribution, which is what we are focusing on. Therefore, I can tell you that Allianz is bringing high levels of innovation in distribution and technology in order to make products more accessible.

In your opinion, why does Colombia not enjoy a higher penetration rate for insurance products?

We are convinced that it is all because of the lack of access to insurance information and insurance products, because there is an insurance culture in this country. For example, compulsory health insurance covers around 98% of the population. We just need to find alternative channels to boost accessibility, which Allianz has succeeded in thanks to its commitment to innovate in the distribution area. The industry is constantly growing, regardless of economic downturns, and I expect that the insurance sector will finish 2012 with a growth rate of 15%. We have to keep in mind that Colombia is a very dynamic economy in which the middle class sector is growing very fast. That factor is driving the growth of industries like ours.

What are the challenges the sector faces to keep up such impressive growth figures?

Up until now, the sector strongly focused on certain areas, and therefore today segments like infrastructure and large corporate risks are extremely competitive and growth opportunities are very limited. The challenge is to exploit other potential segments such as individual insurance and mass markets and do it in a sustainable way. Allianz is focusing on growing in these segments, through technology and distribution. It is all about making future growth potential a reality.

Allianz owns a 7% market share. What are your future targets?

As a company, we are not involved in all insurance segments, and we do not have future plans to enter into them. Today, our strongest points are vehicle and health insurance, and life where we own over 16%, 20%, and 10% of the market, respectively. However, we have to keep in mind that the latter figure, the one from the health insurance segment, has to be understood in a context where pre-paid medicines also play a role. However, in terms of premiums I would tell you that around 70% of the company's activities are in the first three segments I mentioned: life, health, and auto.

What are the company's short-term investment plans?

We are developing a business strategy focused on organic and sustainable growth, and if there are opportunities to unite strategies with other companies we will consider them too. In terms of investment, we have invested strongly in technology, for example, in the decentralization of the distribution of insurance products and the digitalization of policy issuance, among other things. I believe that through these kinds of strategies, we can reduce costs and therefore become more competitive at all levels. That is what makes us stand apart from our competitors and, as I said, we will close 2012 with an overall 20% growth—40% if we only consider the main strategic segments for the company.

How many clients does the company currently have?

In terms of insurance policyholders, we have over 400,000 clients. However, we reach a far larger number as proved by the 1.2 million insurance policies that we currently have. In this regard, I would like to add that the company has over 1,100 employees.

© The Business Year - December 2012