Sep. 16, 2015


 Julio Moreno Espinosa

Ecuador

Julio Moreno Espinosa

General Manager, Seguros Oriente S.A.

TBY talks to Julio Moreno Espinosa, General Manager of Seguros Oriente S.A., on a changing portfolio, growing product lines, and the potential for growth in the sector.

BIO

Julio Moreno Espinosa studied insurance and reinsurance with the Munich Reinsurance Company in Germany, and graduated in business administration from the Universidad San Francisco de Quito in addition to having completed several advanced management diplomas over the course of his education. He began his professional career in Seguros Equinoccial where he served as manager of bonds, technical manager and manager of research and development from 1993 to 1998. In 2000 he assumed his current position as CEO of Seguros Oriente S.A.

Almost 26% of the total premiums issued in 2014 came from the vehicle segment. However, in October 2014 you decided to hand your vehicle portfolio to QBE Seguros Colonial. What influenced this decision?

We have experienced several normative changes over the past few years, by which our industry was affected. Taxes are not always conducive to our business principles. With insurance, you share huge losses with many people, and in this scenario, taxation is a huge restriction. With several new normative changes, we decided to focus our business on the client. We look at medium and large sized companies and provide total solutions for them. We realized that it was almost impossible to maintain two types of business that are really quite different. The auto segment and the car insurance business are necessarily distributed on a large-scale commercial basis. We were able to do so, but with the legislative changes it became expensive. This kind of business has to be managed by volumes rather than margins, and that is what is used to control the prices, which are increasing everyday with imported cars coming in. We were one of the first companies to make the swap, and we did not make the decision as a cash business, but rather a strategic business. We thought it was the best opportunity to show the benefits of insurance. We still have work to do, and we need to demonstrate the advantages of our coverage. The community can sometimes have a negative view of auto insurance, because it is sometimes regarded as a tax. For us it was not a huge loss to end the auto insurance side of the business because it was restricting our commercial strategy.

Which markets are currently the most interesting?

The formal and traditional private sector has growth potential because of the current economic situation in the country. There is more room in personal business, and we conducted studies to prove this as well. Much of the Ecuadorian market is not attended to by the insurance sector, especially along the personal lines. From life insurance to car insurance, there are many product lines that are growing, and that have grown in the last ten years. There is a market for residential fire insurance, and this kind of market is where the future lies. There is much demand in the education segment as well as in employment insurance. We are also seeking alliances in life insurance because we do not have that product line right now.

What is your long-term outlook for the sector?

It is difficult to say what will happen in the industry because the minimum capital requirements have changed. We thought that there would be a fast reaction from the sector, but there was not. We do not know why, because there is not enough business for everyone with these conditions. You have to optimize the market, and there are perhaps too many companies competing for the same business. The market still needs companies specializing in solutions. There needs to be an even focus on different areas, and that is what our strategy is. We want to focus and find out where the markets are, and prepare and develop products for them.

What growth prospects do you have for this year?

For this year we are anticipating 14% growth, which is large because the industry has gone down by 15%. The automotive business will not grow that fast, and we doubt that car insurance will help with that. We are offering more solutions because sometimes clients need to be pushed towards a certain company when the offerings are all so similar. With a captive market, we can take advantage of that. We launched the new corporate branding, the main reason being to add an inflection point. We are one of the first companies that already have the minimum capital requirements, having made a $3 million investment last November.

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