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José Ramón Tomás Forés

MEXICO - Finance

Playing Down the Channels

Executive President, MAPFRE Seguros


José Ramón Tomás Forés has a degree in Insurance and Business Administration, and has been at MAPFRE since he began his career. Before joining MAPFRE in Mexico, he worked as a Director at MAPFRE Galicia and as a Regional Director for MAPFRE in Levante and Catalonia. He is currently Executive-President of MAPFRE Mexico and Vice-President of the Mexican Association of Insurance Companies (AMIS).

How would you assess the growth the local insurance industry has experienced in recent years? Over the last 10 years, the industry has lost weight within the national economy in […]

How would you assess the growth the local insurance industry has experienced in recent years?

Over the last 10 years, the industry has lost weight within the national economy in general terms. Although it has grown every single year, growth figures have only been single digit, as compared to other regional markets such as Brazil and Colombia. Nevertheless, Mexico is the second largest economy in the region, and that is enough to attract all the large international companies. At the moment, there are 106 insurance companies in the market, among them many multinationals. For example, around 70% of the premiums in the market belong to foreign companies. Interestingly, companies that were leading the market a decade ago are today in the hands of foreign enterprises. We have seen an important increase in the number of players in the sector. In the past, the five leading companies owned 65% of the market, whereas now they only own 45%. For these reasons, and some others, we believe that the Mexican insurance market is very attractive at the moment, and we have high hopes for the future. In terms of Mapfre’s performance, we have grown above the industry’s level for the last 10 years, and that is something we have always prioritized in our business strategy. In nominal terms, we grew by 22% during 2012, whereas the sector expanded by 14%. Vehicle insurance products, among others, considerably grew last year, and we believe that automotive insurance and individual life insurance are the segments that will drive the growth of the industry over the next few years.

What have been Mapfre’s main strategies to expand demographically and geographically?

Branch network expansion has been one of the main priorities of the company in recent years. For example, we closed 2012 with 425 branches across the country, of which 100 are what we call direct offices. They provide regional support and coverage to smaller branches, while they also strengthen interconnectivity within offices and the headquarters on all levels; customer support and insurance queries, for example. Such network expansion was frameworked as the first step to later increase our participation in the micro insurance segment. It is a market that offers many opportunities, especially since 2008, when new regulatory policies came into effect. Today, Mapfre is the leading company in the micro insurance segment, where we own approximately a 40% market share. I would like to say that Mapfre sees huge future potential within the catastrophe insurance segment, where we are already fairly active. However, in order to fully exploit its potential, I believe it needs to reduce costs, because at the moment it is very expensive in Mexico. Overall, I think we have succeeded in making Mapfre a multichannel insurance company that emphasizes its work for the customer’s benefit. Mapfre is a leading company worldwide in terms of innovation, and we aim at standardizing insurance processes in order to make things more comfortable for our clients. For that reason, innovation plays a key role in our business strategy around the world. We have a special department in charge of such duties that is in permanent contact with the company’s other areas to better analyze client needs and future demands. Technology is key within this strategy, and Mapfre is developing three technological centers worldwide in Spain, Sío Paolo, and Miami. Mexico will be linked to the latter.

What role should the Mexican government play in supporting private companies to reduce catastrophe insurance costs?

From the Mexican Association of Insurance Institutes (AMIS), we are in the process of compiling data from insurers about the current model of coverage in this segment and whether it addresses the current needs of the market. Particularly, I believe we need to change the current coverage model and look into other market models, such as Spain, in order to change this insurance segment in Mexico. In this regard, I think we need to standardize and reduce insurance rates in this particular segment, and take the example of markets such as Spain, France, or even Florida in the US. Such measures are very much needed, especially for a country like Mexico, which has thousands of kilometers of coastline and there are many people, either as individuals or companies, linked to the tourism sector.

On a general level, what can be done to further develop the insurance sector in Mexico and create a better insurance culture among the public?

I believe we need to pass the draft laws that are currently being discussed at the national level. In fact, the law on insurance institutions (LISF) can soon become a reality. Such steps will represent a turning point for the industry, laying the foundations for the future development of the sector, as we talk about a more modern and efficient regulatory framework for the industry. We can also talk about the future liability law for drivers on federal roads, which I believe will soon come into effect. This law will force all the vehicles on Mexico’s roads to have insurance, and that is something very promising for the sector, because currently, of the 32 million vehicles that circulate in Mexico, only around 27% are currently insured. Such a law is a very important step not only for insurance companies, but for society too. These are just some examples, and there are other potential laws such as labor and federal roads laws that will contribute to the development of the insurance industry in Mexico. It does not only depend on the economic growth of the country in itself, but it needs structural reforms in terms of law too. Mexico is the 14th largest economy in the world; however, it ranks 64th in terms of insurance premiums.

What is your general outlook for Mapfre and the insurance industry in Mexico for 2013?

We are very hopeful to see some of the above mentioned draft laws to become a reality, especially the one regarding liability for drivers. In terms of growth, we expect the sector to close 2013 with a similar growth rate as in 2012—14%-15%. If the laws come into effect, I believe the sector can even grow at a faster pace. Mexico, in general terms, is economically expanding, and there are some very active sectors such, as automotive and construction. That is definitely contributing to boost activity in the domestic market, and it is obvious that the insurance industry can benefit from such activity. The country grew approximately 4% in 2012, and we believe that it can be a very positive year for our industry. Regarding Mapfre, we expect to grow between 18% and 21% in 2013, giving continuity to the expansion of the company in recent years.



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