Ricardo Casares
Vice President
PartnerRe Health Latin America
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View from the Top

Insuring the Insurers

Thu, 09/07/2017 - 09:36

Q: The private insurance market in Mexico is small. How much need is there for reinsurance?

A: The market in Mexico is small because to have private health insurance people must pay twice: once to social security and then to their private insurance. Other countries such as Chile and Colombia have reformed their systems and integrated the private and public sector. Despite its small size, it remains an attractive market as there are eight million people privately insured in Mexico. The insurance companies active in the market are serious and respected companies, so this is an attractive segment to develop for PartnerRe.

Q: How does PartnerRe set itself apart from other reinsurers?

A: Reinsurers offer capacity so that insurance companies can settle any deviations in their results. PartnerRe wants to offer not only capacity but also to be a partner in business, helping insurers develop their own insurance portfolio. We help them improve their profitability, always a relevant factor for health insurance, and amplify their presence in the Mexican market, which results in benefits for us too. We achieve this by being close to our clients and examining their issues carefully. PartnerRe has a team of over 80 people specialized in health, in Mexico and the US. There is a service we offer called Pulse, which helps our clients manage the largest catastrophic claims they may face such as cancer, transplants and heart diseases, in turn helping patients reach the best quality of care at the lowest cost possible.

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Q: What trends are you seeing in the health market?

A: One of the most worrying trends is the increase in cancer cases and the number of claims that insurance companies are seeing. Health costs have always been a worry for insurers as medical inflation is much higher than general inflation. Companies are trying to better understand what is happening in these trends and take preventive action to control this as much as possible, without impacting premiums.

Q: Of PartnerRe’s products in health, which is the most popular?

A: In Latin America, Working Excess Loss is the most popular product. Our client defines a limit they can absorb, in dollars or local currency, per person per year, all costs below that limit are the responsibility of the insurer. If costs exceed this amount, we take responsibility for those amounts in excess. This is the type of product most used to reinsure medical plans. The limit is defined by the size and solvency of each client. To a lesser extent, we have quota shares, or CATs for catastrophes such as pandemic, or an event that impacts a larger number of people.

Q: What growth have you seen in 2016 in Mexico?

A: Precisely in 2016, PartnerRe started its health operations in Latin America. Our initial activities focused on a market analysis, country by country, to define our top priorities. We started well, reaching clients in Peru, Argentina, Mexico and Brazil.

Q: What strategy did PartnerRe implement to establish themselves here in Mexico?

A: Our strategy followed several phases: research and getting to grips with the market, the opportunities and the healthcare system in each country, understanding how the private and public sectors interacted with each other to identify the niches we could direct our service. Once done, we defined priority countries to start our efforts, we established an operating model, then internally determined our pricing and underwriting models and how our operations would work in issuing contracts and managing events. After that, we began visiting companies, announcing that we started our health reinsurance operation in the region, complementing the other lines of business we already had available. Health was practically the only line we were missing in the Latin American market. We approached clients around the dates they were due to renew contracts with their existing reinsurers, requested information, and present to them our offer and services. There are more countries in Central America in which we would like to start operating. We aim to open Guatemala and Panama this year, as we have seen important companies requiring reinsurance services there.

Q: What were the greatest challenges you faced in entering Mexico and how did you overcome them?

A: The greatest challenge is always being better than the competition. Reinsurance prices are low and there is strong price competition, therefore we do not only want to compete on price but also with a differentiated service based on our unique expertise, additional services and our expert team, through our Pulse program. We will continue looking at the Mexican insurance market. There are also possibilities for offering reinsurance to other types of companies such as self-insurers, which are large multinationals and government programs that provide their employees insurance. We could offer them a Stop-Loss type of coverage in case the plan goes over the company’s budget. In 2017, we will be identifying this market in Mexico and in Brazil.

Q: Your 2016 results show 6 percent growth on a constant currency basis. What part of this is due to Mexico and Latin America?

A: A great part of this is due to an important growth that we have in our life portfolio in Latin America. Nonlife reinsurance is going through a difficult phase of price lowering. This is a pressured sector, but on Life and Health we expect to continue our growth trend. In addition to starting our health operations in Latin America, we also started in Middle East in 2016. Opening such niches has pushed company growth. We have expanded so much due to PartnerRe’s desire to be a preferred reinsurer for all our clients, to be a reinsurer that listens to and understands client needs. Before offering a quote we ensure the solution will solve the client’s needs in the best possible way by performing a complete analysis. We focus on offering tailored solutions to clients. PartnerRe is recognized for offering technical solutions with high levels of support that enable us to quantify risks and give solutions.

Q: What will your priorities be for 2017 and how will you achieve them?

A: We will focus on the largest and most profitable markets in Latin America, getting close to target clients and demonstrating our services. In March 2017, we held an event in the US, taking several clients from Mexico and Guatemala and showing them a world-class operation from the largest private health insurer worldwide. We are also working very closely with reinsurance brokers, as they play an important role in several markets. We are planning to grow organically, although we are always open to the possibility of inorganic growth. Last year we acquired a reinsurer in Canada for health. Other acquisitions and strategic alliances have been made in the past, for example with BestDoctors we are offering a popular product in Asia.