Public Awareness Key to Increasing Coverage

Q: What does MAPFRE bring to the Mexican insurance market?

A: The Mexican insurance market has a good number of companies, standing at around 100. It is a market that is sufficiently competitive in every branch. MAPFRE has been in the market for 30 years and we are practically a Mexican company now as we understand the main characteristics of the market. What we provide as added value, as a global company, is our experiences and good practices from other countries. We can introduce elements from more mature markets, particularly with respect to specific insurance products and regulations. One area where we have collaborated with other industry players is tools for investigation and verification related to automotive insurance.

Q: In terms of insurance services, what are your strengths?

A: We have grown in every branch of insurance. Automotive insurance is definitely a reference. However, we are generally strong in areas associated with personal life, including marital, civil liability, damage and medical insurance. We offer a variety of pension plans for retirement. Our products can be acquired by individuals or companies. Lastly, we offer financing services, working also with collaterals and providing guarantees of assistance.

Q: What should improve from a regulatory perspective to boost the insurance market in Mexico?

A: Insurance penetration in Mexico is low. For example, only 30 percent of vehicles in this country have some kind of coverage. What worked well in other countries was making it mandatory by law for car owners to have third-party insurance. But it is not enough to implement a law. It needs to be enforced by a designated government agency. This mechanism could be applied to many other basic areas.

There needs to be more collaboration between the public and private sectors to facilitate growth of insurance coverage. Insurance is an intangible asset that appears only when an incident happens. If you are uninsured, you are left in a vulnerable position. Take the 2017 earthquake for example. Only 6 percent of the buildings struck were covered by insurance. People were scrambling for public resources to recover. Apart from individuals, the government can also benefit from greater insurance penetration. Costs for hospitals in the public sector, for example, are very high and represent a significant financial burden for the state.

Q: What can insurance agencies do about this?

A: The first step is to have better channels for providing information. When you ask people if they are preoccupied with things such as their pension, they express clear concerns. A significant part of the population is not contracting insurance because they are not aware of the options and the benefits. Better media communication strategies are needed, along with more agents who can explain this effectively.

Second, you need to ensure that products are accessible. Certain segments of the population have different financial capabilities than others. This means you need to design products that adapt to the needs and resources of the client.  

Q: What role can technology play in boosting insurance penetration?

A: We see technology as a great opportunity for our company, not a threat. First, technology opens up more communication channels to sensitize people about the challenges they face. Insurers can provide people with better explanations for their products. For example, many people are worried about their vehicles, but they have no coverage whatsoever for their homes. Your home constitutes the biggest portion of what you own.

Technology is also essential in making service provisions more efficient, from communication to procedures. It also helps to maintain better control and avoid malpractice situations.

Q: Which insurance branch has been the most ignored in Mexico?

A: If I had to pick one, it would be retirement pensions. While Mexico has a favorable demographic pyramid with a large young population, this group will eventually grow older. The current pension system is not sufficient to meet the needs of this population segment. In addition, life expectancy is increasing, which means retirement plans are only getting longer. Individuals and companies need to work on building up savings. The reality is that Mexico has very favorable fiscal conditions for saving. We help individuals to make estimates of how much they should save to meet their needs. 

Q: What are your expectations and priorities for 2020?

A: According to our latest model, given the economic circumstances, the market can expect 9 percent growth. This is because penetration is still at a very low level. Our priority is to continue providing value through our products and services. We will also continue the work with the MAPFRE Foundation, which invests in people in need. Last year, our company provided 1,100 volunteers who helped over 400,000 beneficiaries.  

MAPFRE is a Spanish multinational insurance company. It is the largest nonlife insurance company in Latin America, providing both insurance and reinsurance services. The company has been present in the Mexican market since 1990