Boosting Coverage Through Customized InsuranceSun, 12/22/2019 - 05:00
Q: What are the main challenges for greater insurance penetration among Mexican drivers?
A: Up to 70 percent of Mexico’s vehicle park has no insurance coverage, which is an alarming figure considering that traffic accident-related injuries and deaths cost the country more than MX$120 billion (US$6.3 billion) annually. Low penetration of insurance products in the Mexican economy is partly due to the lack of solid insurance culture and low understanding of the benefits that insurance can offer. Additionally, there is no federal regulation that makes insurance mandatory at a national level or that ensures policies remain valid. Thirdly, the ongoing sales downturn that the new vehicle market has experienced for the last two year poses a key challenge for insurance companies to increase coverage.
Q: What is the best strategy for Mexican companies to face these challenges?
A: Insurance companies in Mexico need to change their product offering. We need to offer policies that are more affordable for a broader segment of the population and that also cater to their specific coverage needs. In that process, insurance companies such as ANA Seguros must adopt digital technologies to strengthen communication with clients. Advanced telecom infrastructure is necessary to boost this process and to reduce IT costs.
Q: How is ANA Seguros changing its product offering to increase its market share?
A: We are creating new payment schemes for our car insurance products. For instance, customers can pay through monthly instalments or buy their insurance on credit with interest-free monthly rates. We need to raise awareness among Mexican drivers that car insurance is not an expense but an investment to prevent sudden, unnecessary expenses related to traffic accidents.
To attract and retain customers, we also need to develop new business models and create new forms of insurance coverage that meet the needs of different client segments. To achieve this, insurance institutions need to observe and understand their target niches and take advantage of new technological developments to harness the potential of new distribution and sales channels surging in the Mexican vehicle market. It is, however, also important to maintain a human touch in the relationship between insurance companies and clients.
Q: How do you expect insurance coverage in Mexico to evolve in 2019?
A: According to the Mexican Association of Insurance Institutions (AMIS), the country’s insurance sector will grow 6.4 percent by the end of the year. To grow sustainably, insurance companies need to increase their profitability. Designing new coverage policies and insurance plans that target the specific needs of the different population sectors and market niches, along with investing in the adoption of IT and cybersecurity rules, can go a long way to achieving that goal. We also need to work more closely with public authorities to increase the recovery rate of stolen vehicles.