The Business Year

Fernando Terneus

ECUADOR - Finance

Winds of Change

President, Tecniseguros


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.

"We have clients in a wide range of economic sectors such as oil, engineering, and construction."

How has the company evolved since it entered the insurance market 40 years ago?

The business idea behind Tecniseguros was born between four friends that saw a gap in the insurance market, especially in terms of counseling and establishing an insurance broker. Therefore, the company was established on February 23, 1973. I personally joined the company in August 1973, when, at that time, the company needed an accountant. Since then, we have set the standard in insurance brokerage and consulting at various levels, becoming a leading insurance consultancy company. The continuous support of worldwide and local leading groups like Alexander and Alexander, Johnson & Higgins, and Marsh Inc. gives our clients a solid guarantee of first-class, international-quality service. A perfect combination of high-quality standards and excellent services, focused on the specific needs of the different sectors we offer integral coverage for, guarantees the satisfaction of our clients. Our company holds a 98% customer loyalty rating, which is our best cover letter. The insurance sector has changed dramatically over the past four decades. I remember that at the beginning it was very tough road for us, for there was no insurance culture in Ecuador at all. However, thanks to our entrepreneurial spirit and through the differentiation of products and services, we achieved our high targets over the years.

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 some other companies in the sector. Therefore, we are a very active player in the entire industry, for our annual turnover is $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.

“We have clients in a wide range of economic sectors such as oil, engineering, and construction.”

In your opinion, 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, for it helps us become stronger. In this regard, I think the market will have positive and sustainable growth in the future, and we will see a further increase of regulatory control from the main national body.

Who are some of your main clients?

We have 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.

What are some of the most in-demand insurance products?

Regarding corporates, they mostly insure their assets: property, plants, equipment, land, and fleets. However, we have a wide range of products available to consumers that commercialize around 40 different insurance companies in the country, and over the years we have become the leading company in the industry thanks to two key words in our strategy: trust and reliability.

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

Being the market leader for over three decades now is something 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 large amounts of time and money in training professionals for the sector. We will continue to do so, for our most valuable asset is our human capital.

What are the competitive advantages of Tecniseguros as compared to its rivals in the sector?

Innovation, leadership, experience, and the continued improvement of the services we provide to our clients as well as the value-added of our services and products are our main competitive advantages. For that reason, we invest a lot in our human capital. We currently have 300 people working for us. Over the last five years, we have grown from around 210 people to 300, for we have expanded activities as well as our sales workforce.

How has your partnership with Marsh evolved since it was established?

We work as a correspondent in the region for this worldwide leader, and we are a part of its international network of associated companies. We have a very productive relationship. Currently, Marsh provides us with new industry trends, and best practices in administration and risk management, which all benefit our clients.

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 of insurance in Ecuador is low compared to countries like Colombia and Mexico.

© The Business Year – March 2013



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