Maturing Chile offers opportunities for insurers

Chile has gone through a process of cultural change in order to become one of Latin America’s most sophisticated insurance markets, according to the chief executive of one of the country’s leading insurers.

José Manuel Camposano, the CEO of Chilena Consolidada-Zurich, also emphasised that Chile’s insurance sector has become a mature industry by learning how to deliver sensible solutions in a country often affected by natural catastrophes. A powerful earthquake hit Chile as recently as September.

In fact, the high exposure of catastrophes is one of the reasons why the country that is hosting FIDES 2015 has developed an insurance culture that has progressed further than that of most of its peers in Latin America.

According to Camposano, in the past 10 years, premiums per capita in Chile increased from $250 to $700, and the industry today represents 4.2 percent of the country’s GDP.

“The growth of the local insurance industry has been sustained by three main factors,” he told FIDES Today. “The first is a cultural change by the population. Chileans have become aware of how important it is to protect the goods they own and to save money in order to maintain the quality of their lives after retirement. This has taken place in a context of better financial education.

“The second factor is an important increase in Chile’s per capita income in the past 30 years. Finally, there is the active role played by private insurance in the country’s social security system.”

It is also a very competitive market, with no hurdles to the entry of foreign groups. There are 64 insurance companies operating in Chile, a country of 17.4 million inhabitants, and none of them has a share of the market that is higher than 12 percent, Camposano pointed out.

Even in this competitive environment, Chilena Consolidada-Zurich has managed to maintain its competitiveness, he said. “We have achieved sustained growth in the past few years, and we have delivered returns in line with commitments to our shareholders.”

Chilena Consolidada was founded in 1853, and Zurich purchased a majority stake at the company in 1991.

The key, Camposano remarked, is to have a diversified operation, a well-known brand and the ability to propose innovative solutions to clients. Chilena Consolidada-Zurich operates in several life and non-life insurance segments, as well as in the vital private pensions market.

“We are present in all business lines and segments of clients,” he said.

In terms of innovation, the company has launched new products that aim to match the demands of clients that are becoming more sophisticated by the day.

Camposano highlighted novelties such as ProFuturo, a life insurance policy with a savings component the goal of which is to create a reserve fund for the children of policyholders when they reach adulthood.

Other examples are a collective health insurance product that enables beneficiaries to request healthcare reimbursements via their mobile phones, and a mobile application to make car insurance claims a more efficient process.

“The latter products are in tune with the current needs of our clients in a country that has more mobile phones than inhabitants,” he said.

The adaptation to a new reality is, in Camposano’s view, one of the tasks ahead not only for Chilena Consolidada-Zurich, but for the industry as a whole.

“Despite the positive numbers, the sector still faces the challenge of adapting itself to demographic changes, a new consumer, political reforms in sectors such as the pension and health systems, regulatory changes and the increase of consumption of insurable goods,” he said.

When it comes to regulation, the most important change that the market should see in the near future is the replacement of the current insurance regulatory body, Superintendencia de Valores y Seguros (SVS), by a more autonomous organisation in a process that should delegate more responsibilities to the industry itself.

Today, Camposano explained, the head of SVS is appointed by the government. If a bill that is being debated by parliament is finally implemented, the responsibility for choosing the head of the new body, which will be called Comision de Valores y Seguros (CVS) will be shared with the market.

“The creation of an institution with collective responsibility and which is independent from the government is a step towards modernity for a mature market such as insurance, which is a fundamental part of the country’s economic development,” Camposano concluded.