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Carlos Arturo Vélez Mejí­a

General Manager, Nacional de Seguros Colombia

Juan Carlos Realphe G.

Country Manager, Lloyd’s of London Colombia

With constant, high growth, a booming middle class, and a government keen on making sure people are insured, there has never been a better time to be in the underinsurance business in Colombia.

What opportunities did you identify in Colombia?

Carlos Arturo Vélez Mejí­a The Panamanian group, first and foremost, saw potential in Colombia because there was only a small insurance penetration rate. This made it an attractive destination not just for the Panamanian group, but for the whole insurance sector. Another aspect was that we were specialized in civil liability and compliance, and President Juan Manuel Santos from the start of his mandate put a great effort into infrastructure. As a result, this was a great opportunity for the company to be in Colombia at the same time as the 4G projects and other infrastructure development got under way for the first time.

JUAN CARLOS REALPHE G. One of the most important decisions in deciding to come to the region was the opportunity to increase the participation of the region in Lloyd’s portfolio. Lloyd’s is not an insurance or reinsurance company; it is a market with 82 members, so any decision needs the agreement of all the group members. The result of this consultation was the possibility of being first in Mexico and second in Colombia. Colombia was chosen for numerous important reasons. First, its geographical position is strategic for the rest of the region. Another is the economic performance of the country over the last 10 years, which has seen constant growth. Another is because the main reinsurers and insurers are currently present in Colombia. They have regional operations from Colombia making it a hub for insurance and re-insurance. This made Colombia a strategic place to be present, and we opened our office in June 2016.

How would you characterize your presence in the market thus far?

CAVM This is the beginning of our third year; however, the development we have noticed and experienced since arriving here is that Colombia is dramatic because we filled a basic need that no one else was offering. We are specialized in big projects and have a high level of standards, but we are still agile, providing services in a flexible way that serves the needs of Colombians well. In the first year, we were the 10th-largest company in the market; the following year we were the ninth—a position that we have kept. Last year was a fabulous one, even with all the difficulties and uncertainties of the market. Our goal is to grow in the long term. However, we have noticed that the penetration of insurance and banks is low in Colombia for a number of reasons because of the services they provide; people have low confidence in financial entities. Once penetration of the banking and insurance sector is higher there will be more appetite for the sector, and insurance companies must work hard to change its general view and generate the confidence needed to reach the growth we expect.

JCRG It has been positive. For the future, our expectation is that it will be even more positive for the insurance market. Lloyd’s has been leading the market in terms of innovation and new products. For instance, Lloyd’s was one of the first reinsurers to cover the LATAM region for cyber risks, terror coverage, and contingency insurance for the cancellation of concerts and sports events. These are specialized coverage models and need specialized knowledge that Lloyd’s can bring to the market. With the arrival of Lloyd’s to the country, we will bring innovation, new capacities, and new knowledge in order to work with all the different actors in the market. The intention and vision of Lloyd’s is to help emerging markets toward one specific but major issue affecting every emerging economy in the world: underinsurance. We have many challenges, like everyone. The insurance industry is passing through a difficult time; there is an excess of capacity, capital, and new actors. As a result, we have a soft market with low rates. Frequently, the rates are not enough to support the operations of companies; this is one of the main challenges we are facing right now as a sector. We are here because we are certain Colombia and the region in general have the potential for growth in underinsurance. We are also focused on educational activities to improve people’s knowledge about insurance.

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