Juan Pazo, Superintendent, National Superintendence of Insurance (Superintendencia de Seguros de la Nación, SSN : Interview

Interview : Juan Pazo

How is the national insurance sector’s regulatory framework being revised?

JUAN PAZO: As the regulating entity, we are now fully committed to having a fast-paced but structured catch-up to international standards working with the OECD and the International Association of Insurance Supervisors. We are also focusing on transparency in order to build trust with investors. Aside from establishing greater transparency guidelines for the local industry, the SSN is simplifying administrative paperwork for companies, which requires a great deal in terms of digitalisation. Taking into account that until recently local insurance companies had zero capacity to innovate, our goal is to boost their ability to offer enhanced products with less red tape. In recent decades Argentina’s insurance sector has not been developing on par with international or even regional markets. We are significantly behind in our quality and operational standards, and part of the reason for this is that we have an obsolete and ineffective regulatory framework.

What are the possible synergies between the insurance industry and the capital markets?

PAZO: The insurance industry is directly related to the overall growth of the economy. In Argentina we are experiencing a drastic and permanent change to our macroeconomic structure and business culture, and so the impact on the insurance sector is quite obvious. In the capital markets sector, the opportunity for greater consolidation with the insurance industry is enormous, and in the context of the proposed Capital Markets Law reform, we anticipate three possible factors that would have a positive impact on the performance of local insurance companies. First, we would like to regulate local companies issuing insurance policies that are adjusted for inflation. Second, there should be greater tax incentives for life insurance and retirement savings funds. Lastly, we have to see support for local companies so that they are able to offer insurance to the financial sector. This would give local companies the tools to develop well above current growth levels.

How do you assess the potential growth opportunities for the local industry?

PAZO: This is difficult to answer in the short-term. However, looking at what other markets in the region have gone through in the past decades, particularly Chile, Colombia and Peru, it is not too much to think that Argentina’s insurance industry could double in the medium term. We have a local market structure dominated by mandatory insurance at 70% with auto, motorcycle and labour insurance. This leaves room for growth in areas where insurance is not compulsory. The overall growth of the economy and the restructuring and normalisation of macroeconomic variables could create sectoral opportunities in infrastructure, agricultural, housing and life insurance.

In what ways is the SSN promoting digitalisation in its own practices and in the industry?

PAZO: Our institution is outdated. Thus, we are prioritising an internal revolution to modernise our processes and operations, using better risk mapping and facilitating the use of digital tools both for customers and insurance companies. The sector’s digitalisation is our biggest driver. We want the digital world to be the paradigm for our operations. This would have a positive impact on the accessibility and control of information with traceability, allowing companies to offer products and services in a different way. We are now working with the private sector and the Ministry of Modernisation to test the implementation of digital systems – proof that the industry and stakeholders are moving in the same direction. This might be obvious in other countries, but it has been a tremendous challenge in Argentina. Today, there is industry-wide dialogue, and this is the best guarantee that the path we have initiated is the right way to develop sector growth.