Seguros Monterrey New York Life’s offices in Mexico City. The company has an ambitious growth plan for the next five years, and aims to increase the size of its sales force by over 65 percent

It’s become almost standard for heads of insurance firms to complain about the vagaries and complexities of Solvency II, the main weapon in regulators’ armoury for making the insurance industry safer. Primarily concerned with enforcing higher capital standards, Solvency II is an initiative launched by the European Commission with reference to EU-based firms, and it has attracted more than its fair share of criticism due to its high cost and difficult implementation.

For Gary Bennett, CEO of Mexican firm Seguros Monterrey New York Life, however, this much-maligned initiative is a blessing that will prove to be of considerable benefit to the domestic industry as it is integrated into firms. “With the launch of the Solvency II model, Mexico has begun to lay the foundation for a much stronger industry that requires higher standards in terms of transparency and accountability”, Bennett observed. “That will generate more confidence among policyholders.” And, despite the reservations of some elements within the global industry, Solvency II is rapidly becoming the gold standard around the world.

4.3% Unemployment rate in Mexico

The digital age

What’s more, while embracing Solvency II, Seguros Monterrey New York Life is also taking everything it can from online commerce. While more vulnerable firms may feel challenged by the advent of the digital age, Seguros Monterrey New York Life is advancing its e-commerce strategy and the necessary infrastructure to support it. For example, the firm recently launched a mobile application for its health insurance policyholders. Called MedicApp, the app allows customers to access a whole range of useful data in a quick and simple way. From whatever device they’re using, they can find information about their own health, about their policy, the health network, and even healthcare tips.

The firm is also striving to become more accessible throughout Mexico’s 1.1 million square kilometres, which span mountains, deserts and jungles between the Gulf of Mexico and the Pacific. As long as a client has a connection, a much-renovated site now allows them to check the current status of all their policies and all information about payments (including impending ones), change personal details and, by no means least, obtain the contact details of their nearest agent. “This is only the beginning”, predicted Bennett. “The sky’s the limit when it comes to improving our customer experience. It’s all about getting closer to the customer and delivering faster and better levels of service.”

In much of its 75 years in Mexico, Seguros Monterrey New York Life has prided itself on being first to market with client-pleasing products based on family, savings and retirement; in short – quality-of-life products. Thus, the firm launched an offer that helped parents put aside savings toward their children’s higher education. Well ahead of its time, the firm created a savings protection strategy for women. And in retirement planning, it pioneered a hybrid policy that protected savings while simultaneously providing a retirement income. However, Mexican culture and lifestyles are changing all the time, and Seguros Monterrey New York Life is already working on new flexible products that satisfy the country’s changing socioeconomic landscape.

A significant second

With a giant market of 123 million people, Mexico is the second largest in Latin America after Brazil when measured by total premium revenue. And revenues are expected to grow rapidly as household incomes improve on the back of a remodelled economy, though there’s still some way to go.

According to the latest available figures from the OECD, average household net-adjusted disposable income per head is just over $13,000, nearly half the OECD average, but that’s on the rise. On the bright side, unemployment is low at 4.3 percent in the first quarter of 2015 (compared with the OECD average of seven percent), and has been falling steadily over the last few years. And, although youth unemployment is high at 8.6 percent, it’s way below the OECD average of over 14 percent. As youth unemployment also declines, albeit slowly, the insurance industry’s hopes rest on an increasingly wealthy new generation.

“Mexico’s main advantage is its young population”, Bennett maintained. “Its financial needs are still basic and mostly unsatisfied. As the young population grows, we expect their financial needs to grow too.” When the rising generation starts buying its first cars and first homes, and starts families, its demand for protection will become more sophisticated.

To that end, the firm hammers home the message that the younger people start saving for retirement, the better the results will be. After all, the wonders of compounding returns have long been proved beyond contradiction. In the meantime, the good news is that the age of clients who buy products is declining. Not so long ago, it used to be 45-50, now it’s 35-40.

“We want to be there on all those important moments”, said Bennett. “It’s estimated that in the next 10 years, Mexico will have the highest number of economically active people, and we expect this to boost the growth of the financial sector in general.”

In terms of penetration, there’s still a way to go too. Less than seven percent of the Mexican population has life insurance and less than eight percent has medical insurance. While that’s better than some relatively impoverished nations, it ranks poorly with other Latin American countries, such as Argentina, Brazil and Chile, with roughly comparable economic growth. “We have a huge potential for growth if we make a comparison with these nations”, Bennett noted.

One of the problems is a shortage of people in the field. Mexico counts 2.5 financial advisors per 10,000 people, far too few to spread the insurance message around 123 million people. “If we want to fully cover the market, we need to increase our presence in all communities”, Bennett explained.

With this in mind, Seguros Monterrey New York Life has drawn up an ambitious growth plan – over the next five years it aims to increase the size of its sales force by over 65 percent. Recognised as some of the most reputable salespeople in the country, the firm’s salesforce boasts more members of the Million Dollar Round Table than any other insurer. And their general philosophy is they are in the field for the purpose of accompanying clients through much of their lifetime. “[We want] them to support clients in developing five to 30 year plans”, said Bennett.

However, the firm isn’t just relying on more troops. In tandem, it’s expanding and diversifying its sales channels. Thus, the firm is looking at every possible technological option, as well as studying changing consumer behaviour.

Impeccable credibility

Looking ahead, Seguros Monterrey New York Life is pinning its hopes on increasing penetration by getting the insurance message across in convincing ways. According to Bennett: “Our focus is on finding the most creative and efficient method of devising financial education platforms that really help people to understand the importance of saving and protecting.”

Compared with almost any other industry, insurance relies on credibility and reputation. Here Seguros Monterrey New York Life can fairly claim to be a step ahead in a competitive market. The firm first opened for business in Mexico 75 years ago – and the parent company, New York Life Insurance, dates back no less than 170 years. The largest mutual life insurance firm in the US, New York Life is a consistent leader in financial ratings, a crucial element in the reputational strength that is reflected in its Mexican subsidiary.

Measured against the Solvency II standard, Seguros Monterrey New York Life is the highest capitalised firm in the country. Currently, its solvency margin far exceeds regulatory requirements, standing at 142 per cent of the standard.

Even though the firm celebrated its 75th anniversary in various ways, Seguros Monterrey New York Life is hardly resting on its laurels. As it develops its reach through online platforms and products, it’s also extending its physical footprint far beyond Mexico City. Earlier this year, the firm opened an office in Chihuahua, a hotbed of industry in the northern part of the country, and next year it will open another important outpost in Guadalajara in the western region. A particularly important step, the Guadalajara office will house around 500 employees and financial experts in a city of 1.5 million, the fourth most populous municipality in the country. Even in the digital age, there’s no substitute for being there