COLOMBIA - Finance
Juan Pablo Lozano has been in the insurance industry since 1996 when he joined the insurance company Confianza S.A., where he held the post of messenger for three years. In 1999 he was appointed president of an NGO until 2008, when he was appointed executive vice president of the Inter Afiancol bonding company. He served in this role for two years until 2010 when he was appointed president by the board, a position he has executed successfully, leading the company to develop and grow into becoming the most important bonding firm in the country.
Initially, we engaged with performance bonds associated with public works, but after the law was reformed we started to work with the contracting of outsourcing contracts. In 2009, we took our business in a new direction, with cooperative funds, which is also known as economic solidarity. We initially launched a product that was extremely well received, called Aficativa. Ever since that strategic move, we have grown at average annual rates between 40% and 60%.
It offers guarantees to the employee fund in relation to the debtor balance. In other words, when an embargo of a debtor takes place, we give an immediate response, paying the credit fees, and we manage the collection of the money from the debtor. One of the competitive advantages that we offer over insurance companies is that we considerably reduce bureaucratic barriers in order to pay. Overall, payment guarantee is our main strategy and mission. For example, when people ask for credit to purchase a vehicle and they do not have a good credit record, we offer payment guarantees. If the person does not pay, we assume responsibility and also embargo the vehicle. We have also become a stronger player thanks to partnerships such as the one we signed with PMI, an insurance company, related to people affected by El Niño. It offers us comprehensive support, which provides us with a reinsurance capability that no other company has in Colombia
I see us increasingly targeting employee funds and cooperatives. When it comes to employee funds, we have been increasingly engaging with large companies and public institutions and we see this as the path to take. We would like to have a stronger presence in the construction sector as well. This industry will be the main economic engine of the national economy in 2016. I expect to consolidate our activity in the cooperative segment over the next year and close the year with a moderate growth rate. We see potential to grow with our renting bond Afiarriendos. I also foresee a crisis in the insurance market within five years due to increasingly low interest rates. There are also far too many players and, in fact, we have seen several companies joining efforts through merges and acquisitions. I think we have managed to find our niche market and we have become a strong player there with a competitive product. We will, however, open offices in other neighboring countries as we see more opportunities and facilities there.
There is a lack of appropriate regulatory framework and we have raised this topic to the national authorities. In this context, we are few steps behind compared to other Latin American countries and we should consider our current situation and how convenient it is. There is concern among insurance companies that they could end up losing business and they are not very keen on such a regulatory framework for reinsurance.
There are plenty of opportunities and the fact that many banks have decided to enter the business means a great deal. It has a high social component that at the end of the day is an essential ingredient in this recipe. Colombia stands at the forefront of economic solidarity in the region. In my opinion perhaps only Guatemala is ahead of us. In Guatemala, the largest bank is the Employees Bank and this was born from a cooperative. Unfortunately, the gap between rich and poor people is growing. There is still a cultural element of informality and other historical factors holding back Colombia from economic equality. Nevertheless, the concept of economic solidarity can really help to narrow economic gaps in our society.
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