REGULAR AUTOMOBILE INSURANCE 25% OF PERU MARKET

Peru 2020 | FINANCE | VIP INTERVIEW

TBY talks to Rodolfo García Solórzano, Director of Quálitas Seguros Peru, on the acquisition of HDI Serguros, differences between the Peruvian and Mexican markets, and the makeup of the national insurance market.

What areas of opportunity in the Peruvian market motivated Quálitas to acquire HDI Seguros?

We were already looking to expand to South America when HDI Seguros called our board president to talk about the opportunity to sell their company in Perú, so we went to have a look at the company. Establishing a company from scratch in Peru takes a couple of years because you have to obtain a complex number of permits. Considering this, we decided it was better to acquire an existing company. This marked the first time Quálitas bought a company to enter a market. We are already present in Costa Rica, El Salvador, Mexico, and the US, but we have always grown organically in other markets. In that sense, this is a different model and way of managing our entry into a new market. What motivated us to enter Peru is that there were no specialized insurances companies. All the companies in Peru that sell motor vehicle insurance also sell property, casualty, life, and health insurance. Therefore, we think that establishing a company focused only in automobile insurance would have a good start and be able to improve the market. Another factor is that Peru has a compulsory personal injury/traffic accident insurance. Equally significant, regular automobile insurance only makes up 25% of the market, meaning we can work to obtain that remaining 75% uninsured market share. This means we can sell a lot of new motor insurance policies.

What differentiated the Peruvian market from the Mexican market?

First, in Peru people see car insurance as a commodity, because all the companies have the same product.. Second, insurance companies in Peru do not have all the service structure that we provide. In Mexico we have our own adjusters and call center, on the other side, mechanics, car companies, and so on are all third parties. With all that we can make a difference. Nowadays, people look at the price and not the service, that's the reason why . Therefore, if we provide a better service we can take a bigger share of the market . Our business philosophy in Mexico are costs control and excellent service and we are trying to replicate this in the Peruvian market.

Will Quálitas replicate the acquisition model again to enter more countries?

Yes. We are not planning any acquisitions soon, but we might do it if we have an opportunity in the future. For now, we want to focus on the markets we are already in.

Through what kind of strategies does Quálitas plan to become number one in Peru?

We are currently ranked fifth and plan to become the number-one automobile insurance company in the medium term. We expect to have 2% of the total market share in 2020. Moving forward, we will be growing faster because part of our strategy is to have a lot of offices. We want to begin establishing more offices in Peru in 2020. Lima represents 30% of Peru's automobile insurance market so naturally we aim to establish more branches there. Moreover, we want to increase our presence in other important cities as well as smaller cities, as we have done in Mexico. We have 400 offices in Mexico and in Peru we plan to establish around 30 branches within the next five years. We want to be close to our clients because in that way we can manage their insurance and solve their problems swiftly. This approach is one of the key factors behind our success.

What is your overall impression of the company's first year in Peru?

The majority of Mexican companies aim to expand into big markets such as the US, Asia, or Europe. We are happy to be in Peru. This is our first time in a South American market and it is completely different. In Peru, 75% of the car market does not have insurance, which means we don't have to fight with our competitors to gain market share. Quálitas has entered Peru to grow the Peruvian insurance market. We do not want people to switch insurers; we aim to encourage higher insurance sales and open new markets here. We need to make people aware that insurance companies are there to pay claims. We want consumers to know exactly when we pay out and why. We also want to help to promote safer driving in Peru as we do in Mexico. Outside Africa, Peru is one of the countries with moredeaths from car accidents. The government is keen to address this issue and we are willing to help them. Unlike other insurers we do not increase our premiums based on age or sex of the driver. Moreover, we are targeting university students to encourage them to buy car insurance because they are going to be the leaders of the future. We want them to remember that Quálitas Seguros Peru was there for them when they began driving.