COSTA RICA - Finance
General Manager, SM Seguros
Carlos Solis is an insurance executive with over 20 years of experience in the industry. He has been the CEO of several important insurance companies and broker firms in Costa Rica, such as Banco Nacional Corredora de Seguros and most recently Seguros del Magisterio (SM Seguros). He was previously with Citigroup in Chicago. He has an MBA from INCAE Business School.
How has the rise in popularity of private sector insurance developed the insurance market?
We are 100% a Costa Rican company that belongs to the private sector. There was an important resistance from the market when the first few international companies entered Costa Rica, but that has changed and those companies have grown in the last 10 years. Our challenge is that Costa Rica is a developing market where we are serving new market niches, and the recent price drop has only added to that challenge. In total, there are around 700 registered insurance products in Costa Rica, but 60% of them are identical. We are starting to turn things around as an industry by pushing intermediaries to talk more to customers to better understand customer needs.
We only offer life and health insurances. Moving forward, medical insurance is an opportunity for growth because medicine in Costa Rica is extremely expensive. In the next two years, we will try to partner with the Social Security System and convince it to let us participate in the medical insurance market. At present, we are trying to create a low-budget health insurance product but we will also try to partner with the government to create a mixed medicine system.
We hired a company to conduct a market study and realized that we were not known within the education sector. Originally, we were perceived as an established non-commercial company and perhaps the first insurance company in Costa Rica before INS started in 1924. We are competing with all the companies that offer similar products and trying to defend our market share. That was not working so we decided to open up and go after the entire market. Costa Rica’s current market is made up of 5 million people, and every Costa Rican can benefit from our products. To that end, we freshened up our image and tried to change the way we do business. Previously, we were only targeting teachers and professors, but we are now targeting the entire society. Moreover, we are striving to be competitive. We are aware that we need a well-developed network of service providers, including hospitals, pharmacists, clinics, and laboratories. Equally important, we have been searching for partners to outsource some services that are we are not specialized in. By doing that, we can focus on our main business, develop great products at a good price, and be extremely efficient in the claims payment.
Under the previous strategic plan, insurance brokers made up 3.2% of our portfolio, inhouse sales employees represented 14%, external brokers that worked exclusively for us represented 25%, and the company the rest. Insurance brokers manage over 70% of the entire market, so we are trying to reposition the company to focus on them. To achieve that, we forbid company employees to conduct business directly with customers. It is vital to have a broker or intermediary so the company can delegate certain tasks and focus on creating new products.
The INS monopoly serves as an opportunity for us to target some of its underserved clients with innovative solutions. We are contacting companies and adding additional services to their life product. We are letting them know our product is not only cheaper but also has other components that can create confidence in their customer base. For example, we have two large prospective accounts that would give us the financial muscle we need to continue expanding our portfolio. We have also innovated life insurance payouts, allowing an advance while we investigate the death. Such a strategy reduces pressure on families and provides them with some funding to carry on with their lives.
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