Seguros Monterrey: Financial education can unlock Mexico insurance potential
Improving access to information, education, and financial literacy are key to insurance growth in Mexico, says Seguros Monterrey CEO Gary Bennett
The Mexican life insurance industry has evolved dramatically with the maturation of the local regulatory landscape. Gary Bennett, CEO of Seguros Monterrey New York Life, discusses the changes that Solvency II is having on the insurance industry, and how Mexico’s insurance providers need to adapt to reach Mexico’s growing middle class.
World Finance: The Mexican life insurance industry has evolved dramatically with the maturation of the local regulatory landscape. Here to share insight: Gary Bennett.
Now, can you tell me about how the industry has kept pace with the growth of the Mexican population?
Gary Bennett: We’re seeing some dynamic times in Mexico at the moment. Not just from an economic point of view, but particularly in a population growth point of view. Mexico has a dynamic, young population, growing in affluence and acquiring for the first time many things – motorcars, homes, getting in readiness for the education of their children.
And there is a tremendous opportunity for further growth in the insurance industry. So it’s a challenge for us: one, to keep up with that economic environment; and two, ensure that we are providing for all of those things that this growing Mexican population requires.
It’s reported that over the next decade or so, the number of people growing into that affluent middle class range in Mexico will be at its strongest point ever in history.
World Finance: So what are the most significant obstacles the industry is facing?
Gary Bennett: Our market has significantly less than 2.5 percent penetration across all of Mexico. Household ownership of insurance in life insurance is around seven percent per household, and medical, accident and health and 7.5 percent.
The biggest challenge that we have is the fact that information, education and financial literacy as people become more affluent and acquire more things, becomes a really important part of the social fabric, and the awareness and the education of what you need to do.
Like many of us, when we’re younger, people don’t really think about the future. And insurance has been something that’s not been at the top of people’s minds, if you like. So we need to further build out distribution models, opportunities to reach more customers in more locations – both through the traditional methods, through agent advice and qualified people who reach out to customers. Through bancassurance and telemarketing, and now through more innovative digital players, as more consumers have access to digital information.
World Finance: Has government insurance regulation worked to address these issues?
Gary Bennett: We’ve seen a significant raft of government regulations driven by what’s called Solvency II in Mexico over the last couple of years. And it does a number of things for the consumer and the marketplace, in both the financial strengthening of insurance companies to ensure that consumers get a better deal, that there’s more transparency, that there’s more corporate governance, that there’s stronger – and much stronger – financial positioning of insurance companies in the Mexican marketplace.
Now, those things on their own will add significantly to a greater level of trust, and a greater level of confidence, by Mexican consumers, as that solvency process is introduced. And again, I think that the government, in conjunction with Solvency II, has pushed out in a number of areas this concept of financial literacy. Working out how you provide insurance protection, how you build yourself a credit card, how you open a bank account, are not the sorts of things that are being traditionally taught in school, as part of the education process. We are seeing more and more of that take place in Mexico.
World Finance: Now your company of course has more than 70 years of experience in Mexico, more than two million policyholders. How do you address their diverging needs?
Gary Bennett: Seguros Monterrey has led the industry in many areas, and in particular – and I say this with a great deal of pride – female products, children’s education products, specific protection and long-term retirement products – that we’ve listened to consumers and the sorts of things that they saw were important in their lives. And we’ve been leading the industry over a long period of time in developing those products.
Again, most of this comes from the fact that we have been in this business in Mexico for a long time. We have a very diverse and beautifully well-spread customer base. And again, more and more the sophistication and understanding of their needs and their wants, aligned to building satisfactory products, is really what the business is about.
So they’ve been really important, right now to the fact that more and more Mexicans are viewing longer-term retirement as a major challenge. The government is saying that we just can’t provide the benefits, so companies like ours have built attractive, long-term retirement products to adequately satisfy that market segment also.
World Finance: Are you looking at increasing your market penetration? If so, how?
Gary Bennett: Definitely. And I think that this is a really interesting and challenging time that we live in.
I think that, one, financial literacy is really important. Two, to ensure that we have an incredibly and impeccably well trained advisor network, so that people can get quality advice from the right people in the right place. Ensuring that as Mexico continues to grow in lots of different geographic locations that we continue to expand our business and look for opportunities to physically be in the right places at the right times, to support customers as those customer pools start to increase.
And our strategic plan over the next few years is to continue to grow in multiple distribution channels, in multiple geographic locations, and to significantly continue to increase and improve our agent advisor network right across Mexico.
You know, it’s without doubt, those challenges as well, in a digital world where more and more players are entering financial services, to ensure that we have the right spread, the right product solution, and access for customers anywhere, anytime, anyhow; to be able to allow them to get the information they need to go forward.
World Finance: Finally, what’s next in terms of the life insurance products you plan on offering?
Gary Bennett: It’s as much about allowing access to consumers through a digital format. Every single one of us now lives with some form of cellular device that allows consumers to do things that they’ve never done before.
I think that we are unique enough and sophisticated enough to continue to listen to the voice of the customer about the sorts of product offerings that they need. The challenge, as we move into a more digital world, is providing those sorts of access through that digital environment, through the mobile environment, which will really take both the industry and consumer access to the next level.