Nearly 2,000 insurance professionals from 41 countries, representing close to 500 organisations gathered in Santa Cruz, Bolivia, last week for the 37th edition of the FIDES Hemispheric Conference, an event that takes place every two years.
FIDES, the Federación Interamericana de Empresas de Seguros (Inter-American Federation of Insurance Companies) represents the insurance sector in 19 countries across Latin America, the United States and the Iberian peninsula and has been a member of MiN since 2014. FIDES supports its member associations in aspects regarding the insurance sector, as well as in the areas of training and information, globalisation and multilateral integration.
InsurTech, digitalisation, inclusive insurance and customer centricity were recurrent themes. Keynote speakers highlighted the need for insurers to differentiate between simply using the advantages of new technology to gain efficiencies in traditional ways of doing business – digitalising their existing business models – and creating entirely new “digital business” models if they are to keep their place at the table in the presence of disruptive market entrants, the “Ubers” of insurance.
Many of these conversations echo the same themes that confront those of us working in inclusive insurance, perhaps not surprisingly given the Latin American context. Overall insurance penetration (insurance premiums as a % of GDP) in the region remains low, at 2.8% (Swiss Re Sigma Explorer), compared to 7.8% in advanced economies, whereas density (premiums per capita), while still just a small fraction of the density in advanced markets, is higher than the average density for emerging markets (US$ 251 compared to US$ 169 in 2018, Swiss Re Institute).
And although the last decade has seen steady growth in the size of the middle class in the region as a whole, low savings rates leave this customer segment highly exposed to financial shocks, a concern expressed at the conference, about which you can read more here. Moreover, uptake of insurance services – and the availability of services that meet even middle-class consumer needs – remains disappointingly low. Reaching the poor with adequate insurance cover is even more of a challenge. Delegates, a number of whom were passionate about helping to drive inclusive insurance forward in the region – recognising the existence of an effective market “failure” – also spoke of the challenges in designing products that are both client-friendly and viable from a business perspective.
Speaking on The Inclusive Insurance Journey, MiN Executive Director Katharine Pulvermacher emphasised the need to embrace this challenge as an opportunity for insurers to engage with new customer segments – the vulnerable, or “emerging consumers” – and for those consumers to benefit from the effective protection that responsible insurance services can offer. She noted that innovation – through InsurTech, digitalisation and new business models and partnerships – offer the launchpad for inclusive insurance to reach scale sustainably, in a way that simply was not available a decade ago.
MiN, in partnership with FIDES, the FIDES Inclusive Insurance Working Group, Fasecolda and ILO’s Impact Insurance Facility will be launching a market development programme in Latin America early in 2020 to support the growth of inclusive insurance in the region.
The next edition of the FIDES Hemispheric Conference will take place in Rio de Janeiro in 2021.