FIDES 2017 highlights opportunities for LatAm insurance industry
The Latin American insurance industry faces growth opportunities by targeting the current significant insurance gap in Latin America with the help of new technology, but industry representatives also underlined the responsibility that comes with the insurance business.
Insurance is there to enable the advancement of society, said FIDES president Pilar González de Frutos, during the opening event of FIDES 2017.
The industry needs to address the existing insurance gap in Latin America, she noted, pointing out that a low insurance penetration also limits economic growth. “Technology is the new ally of the insurance industry in this regard,” González de Frutos said.
Another component necessary to allow insurers to thrive is good legislation that allows companies to grow and evolve and incorporate changes in the market, González de Frutos said.
“A healthy insurance industry is the best investment to enable economic growth,” González de Frutos said.
But González de Frutos also noted that Latin America has its own realities and needs to be creative in addressing insurance needs.
“It is frustrating how little we know about microinsurance,” she said. González de Frutos underlined the importance of microinsurance to take protection to social layers that need it most and often fall below the radar of insurers. She urged the Latin American insurance industry to continue to seek public/private partnerships.
“We have work to do,” she noted, and alluded to the social role of the insurance industry in Latin America. To address this issue, González de Frutos suggested that the industry should work on simplifying the language it uses. “Microinsurance can’t use large and complicated terms,” she said.
“We want to become better. Only then we can grow,” González de Frutos said.
“I have no doubt that we will do it and that we will do it well,” she added.
One of the greatest challenges the insurance industry in Latin America currently faces is increasing the participation in the economy, added Roberto Schildknecht, president of the FIDES organising committee.
Pointing to Asia where the insurance industry is more advanced in this regard, Schildknecht said that Latin America needs to work on the legal system, on regulation, on education, products and distribution, Schildknecht suggested. The industry does not only have to work on how to insure more people, but also tackle other challenges such as climate change, which is increasing the frequency and severity of natural catastrophes, he noted. New technology can help to better predict future events and the industry needs to learn how to efficiently transfer these risks into premiums, he said.
The changes the insurance industry is facing are what makes this conference so important and timely, said Eduardo Montenegro, president of the insurance association in El Salvador, noted. It is essential to increase the insurance penetration in the Latin American region. This must happen in an environment where global warming is increasing the risks from hurricanes. In addition, there are other man-made risks such as cyber-attacks that need to be addressed, Montenegro noted.
In order to cater for an increasing demand for insurance expected on the back of natural catastrophes and to target currently unprotected risks, the industry requires adequate solvency levels, robust corporate responsibility frameworks and an adequate supervision, he said.
Insurance services are delivered in times of stress and pain, but this is also an opportunity to strengthen bonds with customers, he noted. This is however, subject to insurers’ empathy and speed of the delivery of support, Montenegro said. “Technology will allow insurers to be closer to customers,” he noted.
Ricardo Perdomo, superintendent of the financial regulator SSF, added that the insurance industry of El Salvador is prepared and capable to respond to current and future risks.
The regulator is developing a new law for insurance products and is looking to find a consensus with stakeholders to design an adequate framework. Technology should not replace human life but facilitate the life of people, Perdomo noted. “We need to find a responsible approach to the market,” he said.
“We will continue strengthening our industry in El Salvador,” Perdomo noted.
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