During the 30th edition of the Convention of the Mexican Association of Insurance Institutions, A.C. (AMIS), under the title "New realities, securing the future", which was held on May 11th and 12th in virtual format, S3 CACEIS participated with a sponsorship for the event.
The Convention registered more than 22,000 attendants. Main focus for this year’s program was inclusive insurance, new risks derived from COVID-19 pandemic and, consequently, how to generate coverage solutions with simple and affordable products focused on emerging client segments and needs. During the event, speakers recognized that one of the main purposes of the sector is the protection of the population, thus it is required dynamic mechanisms for regulation to move along social changes. The need to approach to population via financial education programs was also a constant concern for the industry because there is a strong linkage between concepts as "problem/crisis/illness/accident" and "insurance". For the sector to accomplish its purpose of protection, it is crucial to break this relationship to communicate that the basic function of insurance is to protect patrimony and its value through time.
In Mexico, insurance sector is very important in macroeconomic terms: it guarantees MXN 284.2bn (12 times the Gross Domestic Product) and it is the 3rd. largest institutional investor in the country. During 2020, the sector demonstrated its resiliency by having a modest contraction, in real terms, of -1.3%.
Despite the crucial role that insurance companies play in micro and macroeconomic terms, its financial penetration barely reaches 2.6%, which means that the market potential is equal to the size of the market currently assisted.
The major challenges the insurers face are: digitization of processes in the product cycle (from contract to claim resolution), innovation to create simple and transparent products that can be massively distributed, and last but not least, inclusion and diversity in terms of assisting particular needs of specific segments of the population. Furthermore, insurers identified to place customers in the center of their business model as a crucial direction to reinforce.
It is well known that crisis generates opportunities and COVID-19 is not the exception. Insurers confirm that it is essential to keep adequate levels of solvency and liquidity to preserve cash flows in order to deal with claims and future challenges. Therefore, it is a common need to generate efficiencies to allocate a greater percentage of the income from insurance policy to risk coverage, instead of covering operating expenses/costs.
In this sense, S3 CACEIS is a partner for insurers, since our commitment to our clients is to generate efficient operating models that allow them to reduce costs, but above all, to allocate resources and people to generate value for their own clients by creating solutions for their specific profiles, interests, habits and needs. S3 CACEIS has proven that account operator model is quite useful for insurance companies. Our based-Swift communication capacities, securities borrow and lending solutions, as well as securities’ auction services are flexible and suitable for the current challenges that insurers are dealing with.
In Mexico, S3 CACEIS has a 15% market share, with 95 billion euros of assets under custody.