Public-private collaborations vital to close gap: FIDES president

Collaboration between the public and private sectors is essential to bridge the gap between the potentially insurable and the insured, according to Luis Enrique Bandera, president of FIDES.

Speaking to FIDES Today, Bandera explained that collaborations are needed to define appropriate regulations that allow for the “incorporation of new technology, the generation of new coverages, the sale of micro-insurance, the incorporation of new sales channels and other factors that make the development of the insurance sector”.

Micro-insurance, in particular, is an issue that the organisation has been keeping a close eye on. During the FIDES 2017 event in El Salvador, FIDES’s then-President Pilar González de Frutos said that micro-insurance was important but underutilised in Latin America.

However, according to Bandera, this reality remains unchanged. “Micro-insurance was a movement, trying to reach the lower part of the pyramid population, which has no access to insurance. But very few countries have been successful,” he adds.

Bandera notes that it’s important to move down the pyramid at a slower pace, covering not the step above the bottom rung of the ladder, with inclusive products.

“This can be done through new distribution channels, such as banks with bancassurance. But, it has to be done with simple products, designed to fulfil the basic requirements of this population who haven’t had access to insurance before. Then perhaps you can go to bottom pyramid with micro,” he says.

He adds: “The opportunities for growth in Latin America are very good if you consider the insurance gap that exists today.”

It is important to mention that in all coverages there are millions of potential insured. The climate, cyber security, health, life, agricultural and property risks of people are likely to generate insurance in all countries of the region.

“Of course we will need new policies in order to facilitate and take advantage of this, such as inclusive insurance and parametric insurance. The potential is there and we are trying to talk with supervisors and local authorities to get into boat and travel with us to facilitate this,” says Bandera.

A changing world

While Bandera is reluctant to state what his crowning achievement as president of the organisation has been (“that is an assessment that FIDES members should make,” he says), he openly states that the main challenge he has faced is to represent the member countries in an environment of permanent change in the economic, social and technological fields.

“We are facing a time where all the parties in the industry are concerned about the challenge that the outside world is representing,” says the president.

“For the first time, insurance companies, agents, brokers and supervisors are concerned about what could appear regarding disruption. A disruptive movement will come from the outside, not from ourselves.”

Taking this into consideration, he believes the FIDES organisation is a good mechanism to address supervisors on issues, including disruption. Bandera has successfully talked with a number of authorities in the past year.

Insurers in the region are also facing administrative challenges because of the laws against money-laundering.

“We feel that in almost all of the countries, it’s the same situation. Companies are getting a little bit concerned because we have been treated in the same way as the banks.

“The transactional volume is not the same. To launder money, money should get in and out. There are very few insurance products that fit into that situation but the rules have been established for all the products,” he warns. FIDES is trying to get the authorities to understand the situation better.

In terms of technological innovation, Bandera says that the industry has been selling the same product—protection—for 400 years.

He concludes: “There has not been innovation in the product itself. We have been innovating in distribution channels, around the main product.

“In the near future, we foresee aggressive innovation in distribution and underwriting, where we’re starting to see some artificial intelligence. But it’s very difficult for something to disrupt the main product.”