Patricia Echauz-Chilip and John Echauz on Philippines Insurance | Standard Insurance | Video

World Finance interviews Patricia Echauz-Chilip, President of Standard Insurance, and John Echauz, Director and Executive VP; on the challenges of insuring the Philippines

November 8, 2013

Standard Insurance Company’s successful 2012 was rewarded in December with an upgrade in its investment rating. Patricia Echauz-Chilip and John Echauz – respectively President, and Director and Executive VP – of Standard Insurance, discuss the company’s success, its approach to catastrophe risk management, and the way it’s working with its customers and the community at large to become the Philippines’ most trusted insurance company.

World Finance: So what were the key contributors to this success?

Patricia Echauz-Chilip: We really believe that we’re here to uplift the lives of people. That means our employees, our customers, and you know, all our stakeholders. Everything we do revolves around that philosophy. For instance, in our country, the Philippines, which is an archipelago of 7,100 islands, we’ve built branches across those islands, and that’s translated into the largest market reach, as well as a very localised service.

John Echauz: We are the largest retail insurer back home, and we insure more motor cars than anybody else. You can have an accident in this part of the city, in this part of the country, and within 24 hours we can get the repairs commenced. Everyone taking the time to make things go faster. Customer experience is very very important to us. And secondly, we are the country’s largest buyer of spare parts. That gives us some scale, and we share the savings with the customers.

Even little things like, we built an app? You take a picture of a damaged vehicle, and it’ll tell you exactly how much it’ll cost to repair. Little things like that, that make life better for our customers.

Patricia Echauz-Chilip: We employ about 800 people nationwide, and they’re really trained in being there for you when you need them the most. So when you suffer a fire loss, or a flood loss, you want somebody sympathetic and who’s on your side. And I think that’s translated for us, in terms of being there for our customer, throughout 55 years.

“It’s called the Floody Car Bag. So when there’s a flood, you just drive your car inside, you seal it, it stays dry”

World Finance: So John, the Philippines is particularly vulnerable to typhoons and flooding, so how do you manage this risk?

John Echauz: Even before climate change, we have always been prone to typhoons, because of our proximity to the Pacific Ocean. Every year we get 26 typhoons coming in. Recently over the last five years it’s been worse, because of climate change. Weather patterns are disruptive, unpredictable, very intense. You know really, what a place to run an insurance company!

But having said that, we protect our portfolio two ways. One is, we have our own catastrophe risk monitoring system. Basically we can take any property, and say, Okay, this property here, it’s vulnerable to typhoons, floods, volcanoes, volcanic eruptions, earthquakes. What can we do to mitigate our risk, and help our customer? For motorcar we of course do underwriting, but we also help each driver improve their driving style. We can track their bad habits and correct them.

And then lastly, in 2009 we had massive flooding. We eventually built our own giant ziplock bag for our cars, it’s called the Floody Car Bag. So when there’s a flood, you just drive your car inside, you seal it, it stays dry. It floats actually, at two feet. And that’s been very helpful for us as well. So these are the things we do to mitigate climate change.

World Finance: Patricia, very few people in the Philippines have insurance, despite the region’s vulnerability, so how is Standard Insurance approaching this?

Patricia Echauz-Chilip: You know, insurance penetration in our country is really very low, and we do our best to educate the market about the need for it. But the first asset they’ll usually have will be a mobile phone, and we insure that. And then they’ll move on to buy a motorcycle, and then maybe a motorcar, and then a home. And we try to be with them every step of the way. And as they see the need for insurance for their mobile, they’ll just sort of, ramp up from there.

“We believe in Philippine talent, and we’ll do our share to move the country forward”

World Finance: One of your aspirations is to become the most trusted insurance company, so how do you plan to achieve this?

Patricia Echauz-Chilip: You know our value system at Standard Insurance revolves around hard work, integrity, and professional diligence. Because of that, we do our best to know our business. And we hope that our knowledge and experience translates to a better customer experience. We have branch managers who’ve been around for a very long time, and with 55 years of insurance experience, and, you know, being there locally, that’s translated to, for us, really being part of the fabric of the community. And I think people know we’ll be there for a long time.

World Finance: John, Standard Insurance is also focused on corporate social responsibility, how do you give back to the community?

John Echauz: Well firstly we focus on staying strong as an institution. We employ 800 people, and each of our employees supports directly or indirectly about 20 people. That’s a multiplier effect in a developing nation such as ours. But secondarily we try to develop Philippine talent. We support the Philippine sailing team, and the national cycling team, in their bids for gold at the Southeast Asian Games, as well as the Olympics, that’s number one. Number two, we support two leading violinists, since they were very young. We brought them through school, and now they’re two of the country’s best violinists. We support schools in the middle of nowhere, in the middle of an island chain, mainly because they’re just so poor and have no access to anything. And we support quite a number of elementary and high school kids, just through their education. We believe in Philippine talent, and we’ll do our share to move the country forward.

“When you suffer a fire loss, or a flood loss, you want somebody sympathetic and who’s on your side”

World Finance: And finally Patricia, what does the future hold for the Philippines insurance sector, and Standard Insurance?

Patricia Echauz-Chilip: You know Nick, our country has seen great economic growth. This year we’re growing, our GDP’s growing by seven percent. While the local insurance industry is consolidating, because of higher capitalisation requirements, you know due to the ASEAN free trade agreement coming in 2016, we think it’s healthy for the insurance sector.

For us, motorcar sales in our country has grown 21 percent this year, and we’re just going to grow organically with that. With a rising middle class, and better economic prospects, I think the future for Standard Insurance, and our country, is bright.

World Finance: Patricia, John, thank you.

Patricia Echauz-Chilip: Thank you so much Nick for having us.