Interview : Manuel Escobedo Conover
In what ways can public sector strategies be coordinated to boost risk management?
MANUEL ESCOBEDO: We aim to achieve a 3.1% insurance penetration rate by 2020, to be successful, we need to strengthen dialogue and form a more solid interorganisational strategy across the sector. The public sector has an important role to play in enhancing and improving the focus on risk-management procedures, as the Mexican economy and society suffer from a lack of risk-management culture.
This development, above all other strategies, should be the top priority for the insurance sector. It should start with the consolidation and centralisation of public policies related to the management of risk, as well as the streamlining of mediation, monitoring and risk assessment, alongside prevention, mitigation and transfer of risk.
Although the state approaches these with different methodologies, a congruent policy alignment would allow the public sector to be more structured and integrated with the private sector. In addition, a greater focus on research-led policies and learning from more developed global insurance markets will allow us to strengthen our internal risk-management capacity. In institutional terms, the centralisation of administrative procedures would be an important step towards the sector’s development. For monetary and fiscal policy, we have centralised administrations such as the Banco de México and the Ministry of Finance; however, we do not have an equivalent unified body for risk management, which is of equal economic importance.
What internal dialogue needs to take place within the private sector to boost penetration rates?
ESCOBEDO: To create effective internal dialogue, the private sector needs to be aligned with the aims of the public sector. The key issue is to generate interorganisational synergies, and this is best done through associations such as the Business Coordination Council, which represents a cross section of Mexican businesses. AMIS was crucial to the sector’s preparation for the introduction of Solvency II regulations in 2016. This prepared the sector for the landmark regulation, and, as expected, the changes didn’t affect sector growth: it expanded by 9.9% in 2017, more than triple the rate of overall GDP growth. To increase penetration, the private sector also needs to understand the market and create attractive, innovative products for consumers. Alongside this, legislators must enforce insurance schemes, the most obvious case being in the automotive industry, where more than 20 states have made vehicle insurance mandatory. In the coming years we are also hoping to implement civil liability, environmental protection and tourism insurance, especially for the arrival en masse of large cruise ships.
How is new technology changing the sector from both the customer and operational point of view?
ESCOBEDO: The importance of technology and digital analysis cannot be understated in expanding long-term growth. We are all service providers, and digitalisation is a trend that permeates the entire sector. The client of today is technologically focused and literate; as a result, Mexican insurers need to be more involved on technological innovation and increase the depth and frequency of their usage of data analytics to develop the customer experience, identifying their needs prior to considering the sale and focus on the post-sale client experience, which is clearly being significantly enhanced.
Technology is also becoming increasingly important in an operational context. Companies use data analytics and computer modelling to more accurately forecast risk, which changes the way we perceive risk itself. This has wide-ranging financial, operational and legal implications for the insurance sector.
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