Spanish insurance giant Mapfre has a broad vision of its role, which extends well beyond its 29.5 million customers. Chairman and CEO Antonio Huertas spoke to Vanessa Macdonald about its challenges and opportunities.
Compliance costs mean insurance companies are under even more pressure, in an industry already known for its high cost base. Is the solution more automation?
The answer is yes, absolutely. We are working hard on this. The industry has many opportunities to simplify projects and processes and to forge a more direct relationship with customers and intermediaries.
Internally, it could be an issue as many times people feel that if you automate something, you would lose employees. But this is not true.
In Mapfre, we can automate many processes and better allocate internal resources to do different things. We have the capabilities to use these well-trained people to add more value and to usedifferent skills.
It is true that we have some gaps as we need people with digital skills. At Mapfre, we are using a combination of more automation with an improvement of our training processes.
Your annual report refers several times to the ‘digital future’. What is your vision?
Our current strategic plan is based on a digital world as we believe that this is what will drive the company forward. This covers the approach to the customer but also using technology to reduce expenses internally and improve processes. It would also increase the possibility of a better product with lower price, in line with our objective to be more competitive with more linear processes.
Many financial services sectors are now talking about blockchain as being the solution to problems they did not even know they had. Is that also true for insurance?
In the future, it could be a very important technology. We are part of an international consortium – through Mapfre Re – which is trying to analyse ways to maximise use of this technology.
We see advantages as it could speed up the signing of contracts and the possibility to simplify international relationships; processes which now take two or three days could be shortened to seconds or minutes.
Would the exchange of information enabled by blockchain help you to fight fraud?
Fortunately, while fraud is an international problem, it is a limited issue: 99.9 per cent of our customers are genuine. We would not want to dedicate huge resources to a minimal problem. We do fight it using data management and better technology to identify problems and I believe that Mapfre has this under control. This is the result of having a network of agents who know their customers.
Why do insurance companies not offer more bundles of different product categories – as the telecoms industry does?
Fifteen years ago, I worked for a company which offered family packages with all the products. We have not replicated this model in other Mapfre companies.
It is an option but it is not easy. Most families do not have high incomes – unlike companies, for example – and if insurance products were bundled, they would have to pay a huge amount at one go. The option would be to allow monthly payments, for example, which is not easy.
We know that we can create a different range of products to offer multiple coverages such as car and home and health. We are working on this idea in many countries, so that we can offer what the customer wants when he needs it.
Does the vertical distribution of insurance products still make sense, when so much is now being done online?
Traditionally, distribution is based on different channels, which could be focused on specific customers… but not always. The majority of our agents have a wide range of customers – from individuals to large corporate – but know each of them well. Now we are evolving towards more customised products. This vertical distribution, as you called it, can help us as the agents understand the situation.
I think we can combine the horizontal distribution with our wide range of products but, if we are able to manage data and know our customers better and manage our agents better, we could be more effective. We think it could be an interesting approach to improve our market presence and our distribution.
Earlier we referred to the cost base of the industry. Are mergers and acquisitions the only way forward for the sector to remain sustainable? Or will it be a race to the bottom?
It depends whether you are talking about the Maltese market or an international one. In the former, there are a few companies in a small market but I cannot see any form of mergers or consolidation. Internationally, it is different.
Mapfre has been an active company, doing acquisitions in America, Malta, Europe over the years. It is an opportunity but this is not the only way to grow. We think organic growth is better. We have to do what we can internally to improve the organisation and to get more customers.
Having said that, we are constantly analysing opportunities.
Your slogan is to become the most ‘trusted’ insurance company in the world. But in the insurance sector there is the perception that insurance companies resist paying out claims…
You are right that many times customers think companies do not like to pay out and that they are difficult to deal with. But it is not true. Companies like Mapfre are very responsible and our first obligation is to pay out; our liabilities are clear. Mapfre has been working for the past 50 years based on this; it is the key to our success on the market.
Companies like us need to work hard to clarify the social role they play. We are one of the highest investors in every country: buying public debt, investing in infrastructure and any kind of financial product. That helps the stability of a country.
We are a consistent player in the economy of every country. Not only people but also governments are not aware of how much insurance companies can do to help society. I am referring to the current issues of the welfare state, pensions, education and public health.
The insurance sector helps to improve the public sector. It is not always easy; probably this is our fault. We have to spend more time and more resources to be more transparent and to speak out about the ways in which we can help to improve society.
The insurance industry presents many challenges. The world is changing and we have to be more efficient. Personally, I joined Mapfre as a trainee, as many other managers and executives did.
As I worked my way up over the past 30 years, I learned that it is the most social economic activity possible, through economic uncertainty and crises, through digitalisation and changes to society, insurance will always be present.
We are doing everything we can to demonstrate that, through this vision, it is a good ally of families, societies and governments. Sometimes they do not fully appreciate our role.
Insurance needs help if it is to help to create a better environment, a better society and a better standard of living.
2017 net results: €700.5 million
2017 revenue: €28 billion
5,400 offices worldwide.
Fundación Mapfre’s social engagement:
• Budget of €50 million in 2017.
• More than 300 initiatives launched in more than 34 countries.
• 8.400 events organised with more than 23 million beneficiaries.