German Aguado
Director of Car and Damage Insurance
GNP Seguros
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View from the Top

GNP Seguros: Steady Growth is Assured

By Alejandro Enríquez | Fri, 05/22/2020 - 17:00

Q: How important is the automotive sector for GNP Seguros (GNP) and how have changes in regulations boosted domestic insurance penetration?

A: GNP was the biggest insurance company in Mexico in 1H19. Our main segment is medical insurance, where we are unquestionable leaders. We are also leaders in life insurance, with the biggest labor force in the industry at more than 10,000 insurance agents. Our third-biggest segment is car insurance, which accounts for 25 percent of our operations.

New regulations have not had the impact that the insurance industry expected. Despite insurance being mandatory, there is no inspection for it and there is no sanction for not having it either. For a moment, we thought the car insurance industry would grow, but the reality is that the same clients we had are the ones buying car insurance.

Q: What strategies would be necessary to increase car insurance penetration?

A: The main goal of car insurance is to contribute to road safety and all incidents should be solved by insurance companies. Most people involved in an accident do not have insurance, which means that injured people are being treated by public health institutions financed by taxpayers. What we are looking for is mandatory coverage regarding medical expenses and death. This means a mandatory, noncancelable annual insurance.

Q: How has GNP thrived in the car insurance market despite the overall market’s deceleration?

A: We are a multichannel company. We have several distribution channels and we do not rely solely on new car insurance but also on products for used cars. Our most important asset is our 10,000 agents. Our distribution channels include the internet, banks and companies that need to insure employees and company cars. We have the capacity to enter all markets. In the new car segment, we are in fact growing because we have been more competitive. We have been efficient in our prices by focusing on our accident cost, charging enough to cover the accident, acquisition and managing costs.

Q: How does your strategy vary when dealing with new and used cars?

A: With new cars it is all about efficiency. Around 70 percent of all new cars are purchased through financing, 60 percent using brand financing and 10 percent through banks. Financed cars always come with insurance since the company granting the loan needs to protect its investment. Brands and banks offer several insurance options to the client and often, the decision is based on price. GNP is the best-known insurance brand in the market, so potential clients choose us when prices are similar. In addition, we have a special relationship with dealerships and financing companies. We have supply agreements to guarantee cars will be repaired at brand workshops while the warranty is still active, which usually lasts two to three years.

Used-car sales are more of a one-to-one deal. The internet has transformed insurance into a very transparent and easy-to-purchase product. Therefore, our clients are empowered and can look at different car insurance options online and then approach the insurance agent or bank to buy it. It is a two-step purchase. Our main strength is our reputation and our several distribution channels. 

Q: In which strategic alliances is GNP relying to grow in Mexico?

A: Banks have become very relevant insurance distributors in the past 10 years. They are a natural link to clients given the relationship they have with their bank executive. However, regardless of where they buy it, we are the only insurance company that has fixed prices. Clients will find the same price regardless of the distribution channel, which gives them the freedom to choose the intermediary while having the certainty that their product will be backed up by more than 115 years of experience. This is our customer transparency strategy.

Q: How has theft impacted the insurance market?

A: Theft is a complicated issue in the truck segment and this is closely related to cargo theft. Three years ago, truck robberies spiked, so we are now working on preventive measures. Today, most trucks are equipped with GPS devices. We also have the support of federal agents and the national guard. Thus, when a vehicle is reported stolen, the authorities take action to recover it. Theft continues but the situation has somewhat stabilized.

Regarding car theft, contrary to what the media portrays, the number of stolen insured cars decreased in 1H19 compared to 1H18, which has helped reduce our prices. Furthermore, there was also a reduction in material damage coverage as people actually crashed less during 1H19. We don’t have an explanation for this but we believe there are several factors around this trend: first, fuel scarcity at the beginning of the year; second, gasoline has become more expensive so people use their car less and third, traffic regulations and car safety systems have also reduced accidents.

Q: How will new mobility options impact the car insurance market?

A: We have studied new mobility trends and technologies in Mexico and we believe they will modify car use but their impact will be gradual. We dismissed an impact on car insurance because insurance penetration remains low. Only 30 percent of cars have insurance. This figure is growing slowly but there is still a big opportunity to grow. At the same time, the middle class is expanding, which means more people will need cars and thus insurance. Growth rates in the insurance market may diminish but for the next five years we do not foresee a relevant variation in demand nor a significant trend in terminating car ownership in favor of other mobility options.

Q: What are GNP’s growth expectations for this year in the automotive sector and what are the biggest opportunity areas?

A: Our prime goal is to keep growing our market share by promoting car insurance products that are within the reach of our customers. Our main priority is for clients to be able to contract their insurance anywhere, easily and at a good price. Once clients have to use it, GNP will support them in addressing every claim in a simple and efficient way. The key for our strategy is digitalization and service. Incorporation of new technologies in attending claims is important. A year ago, we started a self-adjustment initiative. If you crash and no third party is involved, you can take pictures and we settle the price remotely. We have addressed 20 percent of claims using that service since it came online. In addition, we are already running some tests using artificial intelligence. When the car is in the workshop after a crash, through image recognition we can determine repair value without human intervention. This translates into better quality, easier and faster service.

 

GNP Seguros, part of Grupo Bal, is an insurance company with over 115 years of experience working in the life, car, medical expenses and damages insurance markets for both private and corporate clients

Alejandro Enríquez Alejandro Enríquez Journalist and Industry Analyst