In the 1980s, Latin America’s economic outlook was grim, especially in Peru. We faced yearly percentage increases on inflation rates in the thousands (see side bar), the outbreak of terrorism, political instability, high levels of poverty and the lack of a sizeable middle class.
The country’s outlook has improved greatly since then, and as a nation we have embraced open market economic models, bolstered the growth and role of the middle class, and strived to improve productivity. We still face several challenges in the coming years, in matters like the role and strength of public institutions, the fight against corruption and the formalisation of an economy that is still largely informal.
Financial services have had an important part in the country’s economic development
Taking successful risks
Financial services have had an important part in the country’s economic development, and will continue to play a key role in the coming years, with services like access to credit and insurance being particularly important. Businesses in Peru have been able to flourish, by investing in a risky, unpredictable environment. Insurance companies like Rimac provide a measure of protection and predictability that has been key in allowing the economy to grow. Nevertheless, insurance penetration in the country is still one of the regions’ lowest, at only 1.8 percent (premiums to GDP), hence it is very likely that the role of insurance in the future will be exponentially important.
Insurance in the coming years will be transformed, as new trends are disrupting business all over the world. The move in Peru towards wider insurance penetration will stem from the adoption of innovation that redefines how people and businesses shop for, source and interact with insurance providers – which will include not only traditional insurance companies, but new competitors from other industries. Central to this insurance revolution will be the client. Power keeps shifting towards the consumer, and the insurance buyer of the future will gradually level the field in access to information; will have more efficient tools for comparison; will be used to constantly spread opinions on services via social media; and will demand customisation towards his or hers specific needs.
Technology is already driving this transformation in insurance, but we believe it will have an increasing role in the coming years. It will change the way products are tailored to specific customer groups, using big data and analytic tools. These same tools will refine the way we understand and underwrite risk.
An area where technology will have a big impact – specifically analytics and devices – is health insurance. As more and more health data is analysed, insurance will be better able to measure specific risks and therefore provide coverage that adapts to customers, and by using data gathered from connected health devices (like smart watches and phones), companies will be able to create prevention programs and reward customers who practice healthy habits. Additionally, cognitive computing and predictive models will be used more and more to find the best treatment for each patient’s condition.
Advances in technology
The way insurance is bought will also change through technology, as the volume of sales via virtual channels increases and consumers use aggregators to shop for the options that best suit them. At the same time it will change the way consumers interact with the insurance company for different services. Most transactions are being done via virtual channels in many countries, and this shift will start to happen in Peru as well. Customers are moving towards paying, consulting their policy conditions and requesting services via online channels.
At Rimac we are very focused on following these changes, and adapting the best ones to bring them to Peru. Our goal is to be the company that pushes forward disruptive change in the industry. In the past few years we have made major investments to modernise our technology platforms, and we have started a transformation program that revolves around customer centricity and the adoption of leading technologies. These changes include adapting analytic tools to our underwriting, renewals and claims processes for a faster and improved customer experience. We were also the first in the country to offer auto insurance that the client can customise and buy online.
We aim to be a world-class company, and we know that in order to do this we must not only remain current, but move innovation in the industry forward and be the best at understanding and predicting what our customers want. We believe insurance will play a key role in Peru’s development in the future, as it will continue to provide protection against risk and diminish volatility in business and household finances. We are sure Rimac will be able to continue as the preferred insurance provider in the country, while at the same time pioneering technological advancements in the financial services industry.
