How has Interseguro developed in its sector in Peru?
Over the past 15 years, a new Peruvian middle class has emerged with a greater disposable income for many new purchases, one of them being insurance, the sales of which have risen considerably. Yet while insurance premiums are growing at a rate of two to three times the growth of the economy as a whole, Peru remains highly underpenetrated. Insurance premiums account for just 1.8% of GDP, which is low compared to our regional neighbors. The way to accelerate this growth is for the insurance companies to reach customers through alternative distribution channels that can connect with new segments of the population in a cheaper manner. We also need to develop new products that are simpler to use, not least to mitigate the significant mistrust many people have for insurance in general. Many find it complicated, or else suspect some sleight of hand, and think that filing a claim would be difficult. Insurance products must therefore become simpler to buy and use, with people being readily able to collect their payouts.
What specific products and tools are you leveraging?
Digital distribution remains insignificant in Peru, with just a few products distributed to date. We believe that certain products naturally lend themselves to this channel, an example being Seguro Obligatorio de Accidentes de Tránsito (SOAT), the mandatory motor insurance. In that sphere, the superintendency is considering legal amendments to also make the insurance certificate for that insurance category digital.
How has pension-backed life insurance changed the sector?
The way it works in Peru is that 10% of your salary is contributed to an Administradoras de Fondos de Pensiones (AFP), which manages individual accounts for every member of the private pension system. In addition to the 10% collected from you, a small percentage is also collected for disability and life insurance. In the event that a person becomes disabled or dies, they, or their family, receives a pension from this insurance company. Before, each AFP negotiated these insurance contracts with just one insurance company, but following a legal amendment all risk borne by the insurance companies entered one large risk pool, and today the superintendency has auctioned seven packages of that pool, opening it to competition.
Were Peru to implement the Solvency II requirements in the near future, would Interseguro be ready to comply?
The superintendency has been reviewing Solvency II and we have been working with the body, doing some sensitivity analyses to understand the impact on our industry. Right now, the industry as a whole is highly capitalized, and it could indeed be a good moment to introduce Solvency II. However, many criteria have yet to be finalized internationally, and we are waiting for the standard to settle and assume a stable definition before implementation.
What is your five-year plan in terms of growth and focus?
I can't tell you about our growth plans as we are a listed company. But I can tell you that insurance sector growth, as a whole, will continue outpacing that of the economy amid rising penetration. We also believe Interseguro's growth is set to exceed the industry average. Highly focused, we veer toward products for individuals, and not for companies. We also intend to develop our distribution channel further, which is our sales force and Interbank. The products that we work with can be distributed through our sales force, or through Interbank. In terms of data management, we have installed customer relationship management (CRM) software in a program set to be complete by mid-2015. But, our annuities and life businesses are already using this CRM software, which provides us a clearer view and deeper understanding of our clients.
What is the importance of the insurance sector for the overall economy?
I think the importance is twofold. First of all, we cover risks that families could not assume on their own. If something unforeseen happens, like the death of the family's breadwinner, or medical expenses, the insurance sector comes in and lessens the impact of such an event. This vitally enables people to plan for the medium term in the knowledge that if such an event occurred, they would be covered by the insurance company. That is the importance of the insurance sector in general. The second point is that we are also an important institutional investor in the country. We provide long-term funds that are used in different sectors. For example, we believe that our long-term funding is suitable for infrastructure products. Peru is underinvested in infrastructure and needs considerable investment in infrastructure that we can finance. For example, as Interseguro, we have already invested in highways, energy projects, gas pipelines, and water treatment plants. Our portfolio is above $1 billion and we need to make those funds profitable.
© The Business Year - April 2015