That’s the Strategy

What was the strategy behind entering the Panamanian market?

In July 2012, the company owners made the decision to open an insurance company in Panama, starting operations in 2013. Our operational license was received in late December 2012 paying an initial capital of $2 million. And when Panama’s insurance legislation was amended in 2013, stipulating a higher initial capital of $5 million, the company had to rise to the challenge. We came to Panama based on the understanding that it had a tangible need for insurance services. Insurance in Panama today is different than in past years, when the offer was characterized by limited specialized insurance products available for the consumer market. There was a rather weak insurance culture in the country, which we decided to reinforce by incorporating a new insurance company.

How do you differentiate yourselves from your competition?

Competition is high in Panama because the brokers have fully penetrated the entire industry. One of the most important strengths our company has is our qualified staff. All of our employees have had previous experience at other companies. Insurance is a face-to-face business, but we also offer new and innovative products. If you pretend to sell the same as everyone else, you simply do not have any added value to incorporate into your product offering. We therefore developed a portfolio of tailor-made products. When we started out, we had seven products, and by the end of 2014 we expect to be selling more than 15. I think automotive and car insurance are the most demanded forms of coverage, but to that we might also add sureties, health, and individual life insurance.

What are the company’s financial expectations for 2014?

The board directors of the company are conservative. They have a mix of banking experience abroad, and technical expertise in the sale of insurance products. They also pursue conservative goals for the coming years. They do not expect to see major increases, believing, rather, that by the end of the year, we need to demonstrate not only that we have increased, but also that we are contributing positively to the sector.

Why are there so many Venezuelan insurance companies in Panama?

It is important to stress here that we are not just Venezuelans; we are a group of people from across the region. The company’s capital is 100% Panamanian from Panamanian investors, but we also have a technical heritage in Venezuela.

How do you evaluate the new insurance laws?

The new law represents a great opportunity for all. We have good supervision that is technically qualified to regulate the entire market. The insurance regulators have also received training to expand their knowledge base.

Which sectors of the economy most require insurance?

Construction requires a major expansion of insurance uptake, particularly on projects related to the Panama Canal. We are actually not dealing with this issue because you need special qualifications to negotiate in the Panama Canal arena, which we currently do not possess.

What are the prerequisites of establishing an insurance company in Panama?

The initial capital investment needed to establish an insurance firm here is high. Yet in Colombia and Costa Rica, the initial amount an insurance company needs to pay to start operations is even greater. In Costa Rica, for example, it is $8 million. Thus, Panama offers somewhat of an advantage for foreign companies. Also, we have a strong financial center and many multinational reinsurers located in Panama

What is your outlook for Panama in 2014?

The insurance industry has improved, increasing by around 9% in 2013. It seems that everyone is pinning their hopes on Panama. And even though this is an election year, we are expecting to grow by 7%. I believe, incidentally, that Panama’s political situation will remain favorable as long as it continues on the same path.

© The Business Year – April 2014