OBG talks to Rafael Venegas, CEO, Rimac Seguros

Interview: Rafael Venegas

Does vertical integration, with larger firms purchasing private clinics, restrict patient choice?

RAFAEL VENEGAS: The vertical integration seen over the past few years between financing and the delivery of medical services allows the industry to provide better health care for its clients and to achieve greater efficiency in monitoring their health. It is a successful model that is used by numerous well-known firms around the world. A good example of this is Kaiser Permanente in the US.

We see this as an interesting trend in the market that does not restrict patient choice, since the plans offered by the insurance companies include a wide network of clinics. Rather, the new model favours the client because it allows him or her to receive health care services at increasingly affordable rates.

A few large players dominate the insurance sector. How can barriers to entry be lowered?

VENEGAS: Recently it has been announced that a number of new players will be entering the market. These include well-known international firms, the arrival of which will directly benefit Peru’s population as each person will have a wider selection of options to choose from to entrust with their health, life or property.

This represents a challenge for companies that already have a presence in the market, as it demands that they ensure quality of service and efficiency, which will be the differentiating aspects that will determine which companies will be successful. Market penetration in Peru is extremely low, so there is a lot of potential in the market for both old and new companies to explore.

Penetration is far below the regional average of 3% of GDP. How can this be improved?

VENEGAS: Over the past few years, Peruvians have seen significant growth in disposable income, giving some segments of the population access to goods and services that were previously unavailable to them. While the impressive growth seen in the sector reflects the developing maturity of the Peruvian consumer, who increasingly demands the same products seen in other developed countries, there is still a large portion of the population for which such products continue to be out of reach. Peru continues to lack the proper regulations that would allow the industry to distribute mass insurance products that would not have the same requirements as traditional insurance products.

That being said, the strategies of insurance companies over the next few years should aim to increase the penetration rate of insurance for small and medium-sized enterprises and for the employees working in this segment, as these are the areas with the highest potential for growth. This will include the targeting of and sale to certain sectors that have not been a primary focus in the past. For example, there is ample potential in provinces outside Lima and the country’s major cities, such as insurance for those in socioeconomic levels C and D, the development of additional microinsurance products and the offering of products to the smallest companies in each sector.

This growth should be accompanied by a strengthening of the channels of distribution for insurance, as well as better integration of complementary services offered to clients similar to that which has already been seen in the health services sector. This requires an efficient and flexible industry that can prepare for and react to a client base that is quickly expanding.

What is the state’s role in increasing low insurance penetration in the agricultural sector?

VENEGAS: For the agriculture sector, just as for all of the country’s industries, the government needs to develop a suitable framework to promote its sustainable economic development, and by doing so, develop and boost the overall penetration of insurance in the country. Given the geographic barriers that divide the country and its economic activities, it is critical that the government introduces additional initiatives which support the development of infrastructure and the availability of medical professionals throughout Peru.