The Art of Change

Why did Suramericana (SURA) of Colombia decide to invest in the Dominican Republic?

The origins of the group are based in insurance, and it is a company with more than 67 years of history in the Colombian market. SURA is the leading provider in that market. Three years ago, SURA started the process of expanding throughout the region. Seven years ago, it bought a company in Panama, and in 2011 the group bought two companies: one in El Salvador and Proseguros here in the Dominican Republic. SURA has a solid reputation in the region and is focused on sustained profitability based on attracting and retaining customers by offering value-added insurance solutions. SURA has good human resources and excellent risk and capital management records.

What have been the achievements after the first year of operations under the new owners?

We billed more than $74 million in 2011, and have a 10.5% market share. Our current budget forecasts 6% growth over 2012. As of July 31, 2012, we grew 4% above our forecasts. We are among the top four insurance companies in the market

To achieve this 6% growth, what markets are you targeting and what products are you planning to introduce?

In total, 48% of our revenue comes from fire insurance, 25% comes from automobile products, and 16% comes from life and health insurance, with 86% of our company focused on property and casualty and 16% on life and health products.

Why did you decide to concentrate on the corporate sector?

One of the goals in this market is to accelerate the penetration of insurance, which is very low in Latin America. In the Dominican Republic, it is close to 1.4% of GDP. Innovating and creating products that will capture the attention of the customers is important. We do this through alternative channels such as bancassurance or affinity groups.

Taking into consideration the experience and position of the company in Colombia, what innovations did you bring to the Dominican Republic?

An insurance contract includes a host of assumed responsibilities. However, the company always works to add value to different products. Through our automobile insurance solution, this value-added could be the services we offer to the customer such as roadside and home assistance. SURA is very focused on the client and is completely service oriented. This culture of service has been developed over a period of years. Over the last year, we have been focused on aligning our organization with SURA’s corporate culture. The main resource, we believe, is human capital. Pricing is not the only issue—the product and service are also important. We aim to identify customer needs, add value, and develop long-term relationships with clients. Usually, customers in the personal sector move from company to company. We want to avoid that situation. The sector has been focused on corporate clients; we are oriented to multi-segment and multi-product offerings. The usual channel is local brokers, but we have worked to diversify using our expert sales force and the latest in technology. Now, customers and brokers can connect with our database through the internet and obtain quotations. We recently introduced a tool that the customer can use to go directly to an auto repair garage and from there make a claim. That is new for the industry. In the past, customers had to go to our office or to a broker. They can go directly to an auto repair shop and open the claim there.

How many offices do you have in the Dominican Republic?

We have offices in Santo Domingo, Santiago, La Romana, San Pedro de Macorí­s, and Las Terrenas. We cover the rest of the country through the agencies and brokers that work with us.

Who are your main suppliers in business?

Our main supplier is our reinsurance network, which is very important in this business. We have strong relationships with the top reinsurers in the world, such as Swiss Re, Transatlantic Re, and Hannover Re Group. This island is exposed to hurricanes and earthquakes; reinsurance enables us to share the risk in order to provide our clients with the protection they need.

Are there any specific products designed for the Dominican Republic?

All our insurance solutions are designed with our client’s need in mind. Let’s say for example business and homeowner’s insurance; due to the fact that the country is exposed to hurricanes and tropical storms, there is high demand for this type of coverage. Our reinsurance backing is designed to take into account the nature of the country. We are generally conservative. We use A-rated reinsurers to guarantee the best coverage, and our reinsurers have been working with us for many years.

What is your assessment of the competitiveness of the local insurance sector?

There are approximately 34 insurance companies active in the Dominican Republic; however, the top six companies control an 85% market share. The insurance sector in this country has mainly been developed in the corporate sector, making it highly competitive and price sensitive. Therefore, premiums have a tendency to get discounted in order to maintain or attract new customers. The current government is currently working on regulations to promote adequate premium calculations. We believe that future opportunities will stem from economic growth, and insuring first-time clients in the personal segment. SURA’s local operations have experienced a compound annual growth (CAGR) of 30% in life insurance over the last four years. Moreover, only 6% of our revenues came from life insurance six years ago—now this share has climbed to 16%. Our brokers are very happy that SURA entered the market because they felt that the industry needed a change, and the personal segment has tremendous growth potential; they foresee a very positive outcome in this market segment.

© The Business Year – October 2012