LatAm looks to follow Europe’s growth trajectory: Philippe Francois, AXA
Growth in Latin America is a key part of AXA’s global growth strategy. Philippe Francois, global head of life and health international reinsurance business development at AXA, told FIDES Today all about it.
What is AXA’s current market position in Latin America?
We are very happy with our position in our key markets of Chile, Peru and Colombia, where the business has grown strongly. We have also had some lesser success in Mexico which is a market where the main businesses of life and disability are given through public tenders (States and Municipalities), which are extremely competitive.
Venezuela and Argentina are big markets and have some great companies but the political and economic situations there make them quite challenging. Brazil is a huge market, but its structure makes it difficult for international reinsurers to enter.
Our biggest business in LatAm is reinsuring the death and disability cover pensions funds have taken out on their portfolios. We have seen a lot of business there. We have a lot of other lines in LatAm, including health, life and disability, but death and disability has seen the utmost growth.
Where do you see the greatest prospects for growth?
We expect death and disability to grow even more strongly once the market stabilises technically. Health insurance also has potential: there is an underinsured emerging middle class in LatAm, and a lot of scope for the private sector to come and complement public sector health provision.
We are keeping our eyes on Brazil because opportunities could arise there. Officials have said that they are looking at the model developed in Chile, which has been much more open to promoting the private sector in the economy, and if it does follow that path it will clearly create opportunities. But whether it will, and how long that would take, remains to be seen.
We also see opportunities in Central America, in countries like El Salvador and the Dominican Republic, where we already have operations. Those markets have some similarities with Chile, which is an advantage for us.
What can Latin America learn from disability insurance schemes in Europe?
Disability insurance has been around for 50 years in Europe. It took time to stabilise there, in terms of establishing claims controls, proper definition of the coverage and dealing with financial risks, like interest rate volatility. The same is true in Australia. Right now, LatAm is going through that same process. This product interests Chile and Colombia, but it does not have maturity yet.
The experiences of Europe and Australia are definitely applicable to LatAm, many of the challenges faced by LatAm countries are the same ones Europe has already overcome and the application of this experiences depends more on financial or economic issues. Chile is in a similar growth cycle that Europe had in the 80s, that led to the emergence of an important middle class, as well as consumerism. This gives me confidence that we can overcome these challenges more quickly this time around, and growth in LatAm will be faster than it was in Europe back then.
How much potential is there for mass population insurance schemes backed by private sector re/insurance in LatAm?
Recently, we have not really seen new mass population insurance schemes take off in LatAm.
Chile has widely used public-private partnership (PPP) systems. PPP could be extended further in the region for new risks (health, long-term care, etc.)
If Brazil opens its market it might look at mass population insurance backed by private reinsurance.
What might be the other major talking points at Fides?
I think the growth of fintech in LatAm could be a hot topic. We have seen this area dominated by the US, China and Europe, but LatAm can do it too. It had a lot of success in bank insurance in the 1990s and insurtech could be the next thing. The obvious places for it to take off would be Brazil and Mexico, being the biggest markets, but Chile, Colombia and Peru are more than capable of producing interesting fintech start-ups.
Philippe Francois is global head of life and health international reinsurance business development at AXA. He can be contacted at: philippe.francois@axa.fr
