Mario Carrillo
Regional Director of Mexico, Central America and the Caribbean
SCOR Global Life SE
View from the Top

Alternative Routes to Growth

Thu, 09/07/2017 - 12:59

Q: What have been the biggest challenges in insurance and reinsurance in 2016?

A: The main challenges have arisen from exchange rate volatility. Medical inflation has increased and as a result incidents have become more expensive to cover. In addition, since policies are sold in US dollars, it is a challenge for some people to renew them. Another factor is market competition. It is a finite market with a defined number of potential customers, which puts pressure on prices. Some players are prepared to enter the market by narrowing their margins, which also places more pressure on both the insurer and reinsurer. Finally, medical insurance has always functioned like a service. It is not a purely profitable segment; life insurance, for example, has more stable, longterm margins. Medical insurance is more volatile. Yearon-year results vary and are influenced by many factors, including hospitals, doctors’ fees, consumables, new technologies, devices and medicines. Because of these conditions, the number of players willing to participate in the market is decreasing.

Q: What is the advantage of maintaining operations in this challenging segment?

A: Most participants in the medical insurance segment want more. Doctors want increased fees, hospitals want to earn more for each case, agents want a higher commission and insurers want increased profitability. As a reinsurer, our operations are globally diversified and, therefore, we can also help companies by introducing them to best practices and solutions from other countries. For example, to better manage medical expenses, insurers can offer specialized policies that limit coverage to specific conditions, such as fractures.

Q: Which is the most popular of the specialized products?

A: There is a certain product called catastrophic diseases that was developed in the UK 20 years ago. There have been catastrophic products covering 30 different diseases, including some that were quite rare. These products have been optimized and we have whittled them down to six main ones, including cancer, heart attacks and organ transplants. Of these six, cancer has the most impact.

Q: How important is Mexico within your global operations?

A: It is very important. As a reinsurance and insurance market in general, it is one of the main ones. Brazil has almost double Mexico’s population, so by simple numbers, this doubles the need for direct insurance. However, companies in Brazil prefer to retain much of their risk and what reinsurance does exist pertains to a system that was previously a monopoly. Mexico has roughly half the population of Brazil, but we provide double the reinsurance volume, which makes Mexico the most important market for reinsurance in Latin America.

Q: How does the Mexican market compare to others in Latin America?

A: Each country has its particularities and its own challenges. The insurance markets in Latin America have developed differently. In Mexico, private insurance penetration is low and the objective of institutions has always been to increase this, which means that more people are covered. In Colombia, for example, insurance penetration is relatively good. There are several types of coverage, such as pension fund insurance, that do not exist in Mexico. Some countries allow citizens to deduct their private insurance expenses from their federal taxes, meaning they do not have to pay twice like in Mexico, where people pay for public healthcare provided by IMSS and then for a private policy on top of that.

Q: What are your goals for 2017? How will you achieve them?

A: We are seeing strong growth. Fortunately, each year has been a record for us over the last 10 years or so. This is not a coincidence, it is due to our development plan. In Mexico, SCOR ranks third or fourth in its life and health business. We have three main lines of development: the traditional market, reinsurance to solve capital needs and designing new products. We are currently researching other products that could be viable and adapted to this market.