WINDS OF CHANGE

Ecuador 2013 | FINANCE | INTERVIEW

TBY talks to Fernando Terneus, Executive President of Tecniseguros, on the prevailing trends in Ecuador's insurance segment.

Fernando Terneus
BIOGRAPHY
Fernando Terneus was born in 1950 and attended Pontificia Universidad Católica del Ecuador. He has been working at Tecniseguros since 1973, and took over as CEO in 2000.

What role does Tecniseguros play in Grupo Futuro's overall activities and strategies?

We are an insurance brokerage company, and we provide services to the other insurance companies of the Group, as well as other companies in the sector. Therefore, we are a very active player in the entire industry, with annual turnover of $110 million in premiums. In terms of the percentage contribution to the Group, our role has evolved over the years. At the beginning, we contributed the most to the company's portfolio in terms of production and distribution. Today, we still play a very important role in the generation of dividends for the Group.

What is the state of development of the reinsurance industry in Ecuador?

The percentage of reinsurance in Ecuador is actually high, because the capacity of local insurance companies to support such eventualities is rather low. For that reason, we have seen many investments from local and foreign companies in this segment. Today, I would say that both the insurance and the reinsurance sectors in Ecuador are very competitive, and the beneficiary of such competitiveness is the consumer. As Tecniseguros, we welcome such competition in the market, as it helps us become stronger. In this regard, I think the market will see positive and sustainable growth in the future, and we will witness a further increase of regulatory control from the main national body.

Who are some of your main clients?

Tecniseguros has a strong focus on the corporate segment of the market. In this regard, we have clients in a wide range of economic sectors such as oil, engineering, and construction. We provide cover for both large corporates and for SMEs. However, we have to keep in mind that public works projects have driven the growth of the sector over the last few years, and we cannot access that segment. In addition, the health and individual insurance segments will assist the growth of the sector in the near future, as trends have already shown in the last couple of years. In this context, Tecniseguros has, in many cases, taken the lead in terms of innovation in the industry. Currently, corporate companies represent 80% of our client portfolio, whereas the remaining 20% are individuals. Our main future strategy is to attack this segment to further grow our presence in the market.

“Currently, corporate companies represent 80% of our client portfolio, whereas the remaining 20% are individuals."

What is your business strategy to maintain your leading position in the market?

Being the market leader for over three decades now is very difficult and demanding. Our main challenge is to maintain such a leading position in the future, for, we have been the reference company in the sector. We believe we have plenty of opportunities to do so by further expanding our presence in the individual insurance segment. Our aim is to provide services and products to each Ecuadorean family. At the same time, we have to keep up our hard work in the corporate segment and for SMEs. We have done much to professionalize the industry by investing considerable time and money in training professionals. We will continue to do so, as for our most valuable asset is our human capital.

What is your general outlook on the insurance industry for the future?

The insurance industry has considerably evolved over the last two decades, and consumers have become more aware of their needs and the availability of products. For that reason, we have seen a specialization process among insurance companies in order to better grab market share. Competition has increased, causing positive outcomes, and that has contributed to better manage the risks of our customers. In other words, we had to become better counselors for them. The increasing purchasing power and the large amounts of investment injected by the government have created many opportunities for the industry. That has and will continue to drive the expansion of the sector. The growth of the industry has been supported by an increase in the sale of cars and the fact that finance institutions have incorporated and promoted insurance activities. This will also increase the sale of insurance as the per capita consumption in Ecuador is low compared to countries like Colombia and Mexico.