What are the mission and vision of Royal Seguros?
When we started this business, our goal was—first and foremost—to improve market penetration rate. Our second goal was to improve insurance as a product. Our origins come from a state education company, the Higher Polytechnic Institute of Angola (Instituto Superior Politécnico de Angola), which has brought together education projects that were once schools. This is the reason why some of our products are targeted at students and teachers. We focus on the education market, fundamentally on higher education, because there is a strong need for it. It is the fundamental basis for the progress and growth of the country. Without trained and educated people, we cannot dream of a bright future for Angola.
Insurance penetration remains extremely low in Angola, about 1%. What can be done by public and private entities to improve this?
We launched a discussion forum for participants in the insurance industry—more precisely insurance intermediaries, namely brokers, intermediaries, and agents. To improve the penetration rate, we have to undergo training in insurance mediation. Insurance mediation will not only help insurance companies increase penetration, but also offer better opportunities to people trying to start their own companies. It can jumpstart employment. This convention we supported sought to draw the public’s attention to the effort we are making to generate employment. Given that market penetration is extremely low, the intermediaries must be trained to actually meet the needs of potential customers. We took the initiative of creating a training center in our building at Royal Insurance. The main disadvantage, however, is that insurance, generally speaking, is not mandatory. We only have three mandatory products, and these mandatory products are mainly for companies. The exception here is the car insurance segment. Within the private business segment, the mandatory insurance policies are motor liability insurance, air carrier liability insurance, occupational accident, and occupational disease insurance. It is liability insurance, which is most divided between individuals and companies; however, there is a big deficit there due to the pandemic. Not everyone can meet their payments in full.
The pandemic also dealt a significant blow to insurance companies. To what extent has Royal Seguros been affected by COVID-19?
We are in a period of a serious recession. The main concern in the business environment is to minimize the damaging effects of the pandemic. Many companies focus on how they can sustain themselves and gain leverage following this period. Royal Seguros has been reshaping itself, namely its products and employees and how it reaches out to customers. If we are unable to accept the fact that there is a crisis, we will end up losing market share. For Angola, this crisis was not only caused by COVID-19; it started with exchange rate fluctuations followed by the falling price of crude oil and then COVID-19. Prices must be adjusted, as costs and expenses have skyrocketed; however, the product has not really changed much. A health insurance policy today costs less than USD100; however, a claim from this insurance can cost as much as USD4,800. Therefore, if we do not have a reasonable penetration rate, companies can collapse.
Should specialization be the future of the insurance sector in Angola?
Yes; in fact, the purpose of the insurance business is to generate capacity to leverage our economy. Our financing plan does not foresee, in the short term, profit for shareholders. However, it does foresee financial strength for the company. Hence, we are not here just for profit. We are here for the development of the company in this sector. As a financial company, it would not survive long without diversification. Our financing plan, beyond providing greater strength in terms of the company’s solvency, also provides for an increase in future capital to further secure this solvency.