Global Banking and Finance Review interview Patricia Echauz Chilip, President and Chief Executive Officer of Standard Insurance Company, Inc. the 2014 award winner for Best Non-Life Insurance Company Philippines to find out about issues facing the insurance sector and Standard Insurance.
What are some of the challenges you see facing the non-life insurance industry and how is Standard Insurance addressing these challenges?
One of the biggest challenges has been the catastrophic events, now considered the new reality, and which has created havoc in the industry. The latest of these was Typhoon Haiyan (locally known as Typhoon Yolanda), which was the strongest typhoons ever recorded globally, and certainty the Philippines’ deadliest typhoon ever recorded.
Standard Insurance has been well prepared for these catastrophic events. The Company is supported by a very dependable total insurance structure that has been well in place and which has earned a solid reputation of dependability during recent years’ weather-related catastrophes. These insurance systems and structure of the Company have demonstrated a good track record of managing catastrophe-related losses, underpinned and supported by comprehensive risk modeling software and reinsurance protection from highly rated reinsurers, grounded on stringent risk underwriting, as well as visible and extensive infrastructure, which includes the most extensive nation-wide network of car dealer business partners and the country’s largest and capable claims and technical adjustment team.
Said total insurance structure includes the following:
- Reinsurance Structure:
Our reinsurance support is financially strong and has the capability to respond to claims. For the protection of our clients as well as of the company, Standard Insurance does not deal with any local reinsurer. The Company’s reinsurance treaties are mostly under excess of loss basis and supported by highly rated international reinsurers, which have buffered the Company from the impact of high severity losses of the recent catastrophic events.
- Risk Engineering Capabilities:
Our Risk Engineering Group, the only one in the industry, is composed of engineers who have been trained in risk assessment and the use of Zurich Risk Engineering’s risk grading system called CRS Database. We insure only those risks that we understand and assess properly, together with their coverage and endorsements. In this manner, questionable claims are avoided thus facilitating their proper settlement.
The Risk Engineering also does relevant studies such as “Determining Earthquake Capacity for an Insurance Portfolio in Metro Manila” thus giving the Company a macro view of “what could happen” and containing risks against earthquakes.
- Catastrophe Risk Management System (CRMS):
Integral to the insurance structure is the application of the Company’s comprehensive risk modeling software, the internally developed Catastrophe Risk Management System (CRMS) where the Geographic Information System (GIS) or digitalized hazard mapping is applied to the assessment of natural hazards, such as earthquake and flood risks. Risk accumulations are thus controlled.
- Simple but well defined Underwriting Guidelines:
The Company continuously assesses its risk portfolio, underwriting guidelines, and supporting systems so that these remain relevant to the changing times. With the series of catastrophes that plagued the country, the Company recently set up its ‘New Directions for a Sustainable and Profitable Book’.
The Company continuous to focus on disciplined underwriting, fast claims turn-around, and sustainable profitability.
- CAT Response Initiatives
This include the creation of a catastrophic response team, composed of claims and technical people, supported by logistical requirements that is essential to claims servicing when disaster strikes.
- Disaster Recovery Plan
This ensures that in the event of a disaster or a catastrophe affecting our Head Office data center, a Disaster Recovery Team, can immediately recover the Company’s critical IT systems from an alternate site, within the prescribed Recovery Time Objective (RTO).
Another major challenge is the intense competition facing the non-life insurance industry, with seventy non-life insurance companies competing for a relatively small market, the latter as a result of the minimal penetration rate.
Our strategy amidst extreme competition is simple – OUR STRATEGY WILL STAND
- Speed of Claims Service
- Trustworthy and Knowledgeable Sales Force
- Accessibility through distribution network and Online Sales
- New thinking and innovation that reduces costs
- Disciplined Underwriting that ensures acceptable risks, intelligent pricing and sustainable growth
How are capital requirements impacting insurance companies in the Philippines?
The Amended Insurance Code of the Philippines mandates the graduated increase in capitalization, to increase every three years, initially at Php250 million by June 30, 2013, Php550 million by December 30, 2016, Php900 million by December 31, 2019, reaching Php1.3 billion by December end, 2022.
This graduated increase in capital requirements is expected to result in more mergers and acquisitions among its members, or at worst, companies deciding to surrender their licenses altogether, weeding out weaker and smaller insurance companies, some of which have resorted to unhealthy competitive practices just to survive.
This amended provision, together with other changes incorporated into the Amended Insurance Code such as wider investment outlets, loosening bancassurance restrictions and financial reporting framework more aligned to internationally-accepted accounting standards, among others, are expected to pave the way for a stronger insurance sector, making it better prepared for the integration of member-economies of the ASEAN in 2015.
How have automotive sales and construction activities impacted the non-life insurance industry?
Premiums from fire and car insurance account for close to seventy percent of the total premiums generated by the Industry. As such, the main growth drivers of the non-life insurance industry remain to be dependent on car and residential purchases.
The year 2013 set a new time record of 16% growth in new car sales, from 156,649 units in 2012 to 181,283 units in 2013. The upward spiral of sales growth continues in 2014 as total units sold as of October has reached 192,005, for a year-on-year growth of 30%. Such is this year’s remarkable performance that the Chamber of Automotive Manufacturers of the Philippines Inc. has already escalated its 2014 end of the year sales target to 250,000 vehicles, from the original projection of 230,000 vehicles.
In the meantime, the property sector remains vibrant, showing no signs of slowing down, even as the country recuperates from the massive destruction caused by super typhoon Yolanda. Most property remains bullish on the economy and sees more areas for growth. Real estate developers continue to acquire lands and build, BPO (or Business Process Outsourcing) offices continue to grow and prices in Makati Central Business District (CBD) rises from seven to twelve percent.
Philippines is vulnerable to natural catastrophes, what initiatives are taking place in the insurance sector to help prepare for CAT events?
The Industry recognizes the vulnerability of the Philippines to natural catastrophes and have initiated several initiatives:
- The Philippine Insurers & Reinsurers Association (PIRA) and the Insurance Commission of the Philippines (IC) are looking at the possibility of setting up a CAT pool for EQ, typhoon and flood, specifically for residential risk.
- The IC has mandated a minimum five percent reinsurance cover for property catastrophe (EQ, typhoon and flood), based on total accumulated total sum insured (TSI) per insurance company.
- The Insurance Commission of the Philippines (IC) has mandated the industry to offer the Acts of Nature cover (formerly referred to as Acts of God) at tariff rates and commissions.
– Microinsurance, per the Department of Finance (DOF), is “the insurance, insurance-like, and other similar business activity of providing specific products and services that meet the needs of the poor for risk protection and relief against distress, misfortune, or contingent event”. Further, it says, “Since microinsurance products and services are intended to meet the risk protection needs of the low-income sector, affordability of premium payments is low”.
Considering that the Philippines is always hit by typhoons and other natural calamities, insurance protection going down to the grassroots of society, is one huge step towards protecting those who need them most, during natural calamities.
With aggressive support from the DOF and the Insurance Commission, 20.4% of the total population is now covered with microinsurance, and the Philippines having the highest microinsurance coverage among Asian emerging economies in 2013, per the DOF.
Standard Insurance is a leader in the Philippines insurance sector. What do you attribute this success to?
Standard Insurance’s Key Success Factors are as follows:
- Market Reach
Widest branch network and car dealer network across 7,107 islands. We have excellent market reach and we insure all properties from motorcycles in the rural areas to big conglomerates in Metro Manila CBD. We are the direct service partner of Zurich insurance in the Philippines and we are the market leader in Motorcar Insurance, with 25% market share of new cars. Motorcar insurance premiums make up 60% of non-life insurance premiums in the Philippines.
- Underwriting Discipline leading to Competitive Pricing
Our risk selection process is very stringent and we use a wide array of tools to ensure a good risk portfolio. We use trained risk engineers, a detailed Catastrophe Risk Monitoring System specific to our country, and constant monitoring of our motor and property risks. This allows us to price aggressively for risks we do like.
- Efficient Claims Processing
Our claims processing for motorcar has achieved a turnaround time of 24 hours and we have 100 experienced in-house motorcar adjusters who are dedicated to ensuring that repairs are valued correctly and handled properly by our car dealer repair shops.
- Innovation for Motorcar Claims
We constantly innovate in order to serve our clients better. Recent projects include RAPID, a repair valuation system situated in a tablet, which allows access to our central parts database and computes repair costs automatically. We also launched the Floody Carbag two years back. It is an industrialized ziplock bag that seals your car in case of floods. We recently launched our Technical Training and Research Complex, a research and development facility that will allow us to analyze motorcar repairs and claims in an even more detailed lab environment.
- Constant IT upgrades
We build our own IT systems in order to mine our data analytics for even more competitive advantage. We have also built our infrastructure to deliver service with speed and enable the scalable distribution of our products.
- 800 Plus Excellent Professionals
We are a team of 800 insurance professionals with a combined 55 years of experience and deep relationships across the catastrophe-prone Philippine archipelago. Servicing customers in their time of need has become who we are. Our core team of executives has wide backgrounds in finance, banking, engineering, motorcar repair, and underwriting.
Global Stamps of Approval
Our systems have been ISO- certified since 2008, and we maintain a global credit rating of A- (A minus) for claims paying ability. In 2013, we also received the Best Receiving Country from Zurich Insurance for our service to their clients in the Philippines.
Standard Insurance was awarded the Best Non-Life (General) Insurance Company, Philippines in 2013 and 2014 by the World Finance Insurance Awards. It also received Best Non-Life Insurance Company Philippines 2014 by Global Banking and Finance Review.
We have maintained A rated reinsurance facilities for all our products and have strong relationships with all our key partners.
Looking back at 2014, what were the biggest challenges and biggest successes?
The biggest challenge would be handling of the catastrophic events. Nonetheless, the Company’s insurance systems and structures, including our strong reinsurance support have protected us from impact of these calamities.
The biggest success as an insurance company would be, “to be there when our clients need us most”. The growing client base and businesses are testaments to this.
Q&A with Clare George-Hilley, co-founder, Centropy PR
Clare George-Hilley is the co-founder of Centropy PR
Global Banking and Finance Magazine recently caught up with Clare George-Hilley, co-founder of fintech and financial services specialist PR agency Centropy, as the company toasts to three years of trading. We asked Clare about what life is like running an agency in the city, the trends she is seeing in the financial services space and what the future holds following the Covid-19 outbreak.
Why did you decide to set up Centropy PR?
I was looking for an opportunity to launch my own agency, both my husband and I had been in the public affairs and public relations industry for over a decade and we thought the time was right to go out on our own.
We could see that the financial services industry was surging, with challenger brands and new technology transforming traditional banks and setting new standards of customer service. There was a huge market opportunity to create and launch a PR agency that could provider first class comms support, alongside a deep understanding of complex regulations such as AML, KYC, and the GDPR. Likewise, many traditional technology firms are diversifying their offerings, to tap into the growing market opportunity posed by the fintech boom.
So, we worked on a business plan, designed a strategy for winning clients and officially launched in September 2017. Within a few months we had a growing portfolio of clients and a thriving business, since that point, we have never looked back!
How is Centropy doing now and what are you plans for growth?
The last three years have flown by and our client portfolio has grown and diversified quickly. We now manage PR campaigns for clients on everything from cryptocurrency, wealth management to payments and trading software.
We’ve also hosted parliamentary debates with key industry figures, including Members of Parliament (MPs) on topics such as the future of the financial services industry and the impact of challenger banks on traditional providers. The team is expanding quickly and we’re investing heavily in the latest training and support to ensure our team members are equipped to reach their full potential.
How do you see the next 12 months?
The Covid-19 outbreak has crippled the economy, forcing millions of people to work from home due to the very serious health risks. The knock-on effect of this crisis will lead to companies cutting costs where possible to save jobs, so tech will play a vital role in ensuring many businesses stay afloat.
We are already working with contactless payments specialists and other fintech companies that offer solutions to help companies survive and thrive despite the inevitable challenges ahead.
We aim to continue building our portfolio of expertise, testing ourselves with new challenges and delivering the best possible service to clients
This is a Sponsored Feature.
Lessons from past recessions and advice for business owners during the coronavirus pandemic
By Neil Davis, managing director and co-founder of Sterling Networks
What is Sterling Networks?
“Sterling Networks is a professional organisation founded in 2014 which facilitates networking events for businesses across the Midlands, Oxfordshire, Wiltshire and the South West. Over 300 members attend our fortnightly breakfast and lunchtime meetings.”
What is your background prior to establishing Sterling Networks?
“During the 1990s, I worked in the corporate team for Halifax. My wife, Tracey, and I went onto own a manufacturing business, which was also called Sterling, and produced a range of gifts, merchandise and promotional items.
“We soon realised tradeshows were a great way to meet distributors and clients. From there, the business grew exponentially, and we managed to build a network of around 500 distributors. Eventually, we became ground down by the manufacturing business – in part because the local manufacturing sector was being devastated by competition from China – and took the decision to sell the business and relocate to Spain.
“After spending several years living abroad, we moved back to the UK to set up Sterling Integrity (EXPO’S) & Sterling Networks (Networking) We were inspired by a desire to help businesses make meaningful connections with one another, and we haven’t looked back since.”
The UK has recently entered a recession, brought about by the coronavirus pandemic. What have you learned from past recessions and how are these experiences helping you to navigate the current crisis?
“I’ve lived through a number of recessions and have seen the pain that insolvency causes companies on a large scale. It’s taught me that there are those who win and sadly those who lose, and that businesses must adapt to a rise in demand for certain products or services at a time of financial crisis.
“Given the nature of what Sterling Networks offers [an opportunity for business owners to connect and grow together] I decided we could build upon the brand due to the demand for new business during the pandemic. We therefore moved our networking events from face-to-face to virtual via tools like Zoom and have gained a steady stream of new members in recent months, reaching an overall total of well over 300.
“On top of that, we’ve taken new staff on during the crisis and have launched a number of new regional groups across the country. I was determined that Sterling should come out of the pandemic with a head start, so my attitude to the recession has been much more positive than those who are forecasting nothing but doom and gloom.
“We can’t pretend high street retail wasn’t suffering long before the pandemic came along, and thousands of new businesses are sure to start up to meet the demand for the products and services that people require at a time such as this. In order to develop and grow businesses need to focus on where changes need to be made to meet this demand.”
Sterling Networks has been providing emotional support to its members throughout the pandemic. What advice have you been giving to members that could be useful to other business owners?
“I try not to be too opinionated and respect other people’s views when giving advice to members, as there are always two sides to every circumstance. I’ve been careful not to say to people that they should be doing one thing or another, as I don’t know their business and its needs quite like they do. The only thing that I have been telling members is the importance of setting up one-to-ones with one another. By doing so, they can listen to the needs and concerns of other, like-minded business owners and work out ways that they might be able to help one another.
“The pandemic has meant we all have a bit more time on our hands, so the advice I would give to people is to use this extra time wisely. Not having to travel physically from one meeting to another means there is a greater opportunity to connect with more people. It’s important to remember that individuals outside of your business can be just as valuable as those within it.”
What makes you hopeful for the future and are there any words of encouragement you can give to budding entrepreneurs?
“The key events that have happened to this country during my lifetime – whether wars, recessions, or the pandemic – have enabled me to take stock of things. While these experiences are certainly challenging, we all become stronger for living through them, and it gives me great confidence that the world will ultimately improve as a result of the pandemic.
“The whole world is effectively rebooting right now, as is the business community. I like to think entrepreneurs will recognise this opportunity to take better care of their peers, and this translates to greater collaboration between organisations. Speak to as many people as you can, ask all the questions that you need to and do your homework. This might well be a difficult time for us all but planning for the future must start now if it is to become as prosperous as I know it can be.”
Exclusive Interview with Ugo Loser, CEO of ARCA Fondi SGR
Arca Fondi SGR is a mid-sized Italian active asset management company. Founded in 1983 by a consortium made up of 12 regional banks, the company has grown in time, expanding its network of distributors and its client base. Nowadays Arca manages Mutual Funds, Pension Funds and Institutional Accounts with total AUM exceeding 30 € bln, reaching more than 100 banks and financial institutions and serving more than 800,000 final clients.
What are the key contributors to ARCA Fondi SGR’s success over the past 35 years?
Arca has always put clients and distributors first. That is to say we have always privileged fair pricing for funds and developing high quality products and services for our customers. This requires constant innovation as an objective and looking for people’s talent to be free to produce its effect
Why are people the founding element of ARCA Fondi SGR and how have you sustained this vision over the years?
We work in small teams, people are young and motivated and can perform duties with a high level of autonomy and responsibility. Innovation is asked to everyone, everyday
What makes Arca Fondi SGR different from other asset management firms in Italy?
Arca is a company focused on doing what it can do very well, that is to say mutual and pension funds, services for clients and banks. We never follow short term trends but always look for long lasting impact on the industry, like we’ve done may times in the past
What products/services has ARCA Fondi SGR pioneered?
Arca has been the inventor of “Arca Cedola”, fixed-horizon, coupon paying funds, which have been with no doubt the greatest product innovation of the past 12 years on the Italian market. This type of funds, at first strictly based on bonds and later as a balanced product, has encountered an enormous success both with clients and distributors due to its simple and effective value proposition. Arca is a market leader also in the “PIR” segment of funds, a range of product focused on mid and small sized companies, that have been the best performers in the Italian stock market for the last few years. In services, Arca is a leader in technology applied to asset management. Our website, app and digital services for clients and banks are award winning, state of the art combination of data, technology and channels, and the best is yet to come on this side.
What strategies do you have in place to sustain your market position and withstand professional competition in the country?
As I mentioned, we do not waste resources on projects with dubious results, instead we constantly invest on people, products and services. The high level of profitability that Arca has been able to maintain even in difficult years for the markets of the banking sector is a further testimony that this strategy works very well
How do you use technology to create meaningful experiences for your customers?
First of all, we have created a whole new division, Arca InnovAction Lab, dedicated to technology, data and processes. This ensures projects are delivered quickly and they are free to leave bad past practices behind. Arcaonline.it, Arca’s website, provides distributors with detailed information on clients’ portfolios, asset under management and subscription/redemption requests. It monitors aggregate selling data offering to our partners a suite functions and analytics to track commercial campaigns. And if the banks branches need assistance, they may ask Sara, our digital chatbot. A broad and timely multimedia production, covering exclusive reports, comments, presentations, videos, webinars and newsletters is also available on the website.
Customers, subscribing Arca’s funds through its distributors’ network, may access Arcaclick, a dedicated area on Arcaonline.it. With Arcaclick the client can easily browse through her portfolio of funds, analyze its characteristics, view transactions and historical funds’ performance in customizable views. Arcaclick is also a powerful source of information on Arca product range: Prospectus, KIIDs and other literature is easily accessible along with news, comments and reports. Arcaclick may also be accessed via Arca Fondi App, a free application for mobiles and tables, running on both iOS and Android. Available 24/7 and in mobility, Arcaclick gives clients the opportunity access information, news and details of their personal portfolio anytime and anywhere.
What key trends will drive pension growth in 2020 and beyond?
The Italian market for pension funds is still very small and therefore there is a great opportunity to grow. Arca Fondi manages the biggest open ended Italian pension fund and it’s been constantly at the top of its rankings. As people and workers are looking for yield and to weather short term volatility, the pension fund is very well poised to profit from this trend.
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