As policyholders, we generally remember the issue when we decide to travel abroad with the vehicle, or are stopped at a police checkpoint or even when we enter a gated community that requires us to present the coverage certificate. For those who have employees, for the mandatory ART insurance. Others, why we suffered an accident, because of the relationship with the insurance advisor producer, etc.
We rarely see news in the mass media linked to the industry. For example: we all remember the Eleven tragedy, but how much was the sum insured for the train? Who was the insurer or how much was paid to the victims?
Insurers are the world’s largest institutional investors. Broadly speaking, it is a solidarity system par excellence, where we all pay to help those who suffer an accident. Its capital and technical reserves play a key role in the functioning of the world’s economies and in productive and financial development.
We are going through an unprecedented political, economic and social crisis. And the insurers? Few know that there is a regulator, the Superintendence of Insurance of the Nationor whathe insurers have gigantic investments in government bonds and what that implies. But in any case, what is the exposure of insurers to these titles? This is worrying, not only because of the amount, swaps and re-profiling, but also because this can affect more than one insurer when it comes to complying with its regulatory obligations and with the insured. However, is there a developed capital market for them to invest in other financial products that contribute to the productive economy and employment?
We return to the questions: What do we know about the payments (or not) of the claims, the stock of judgments, or the decisions of the Justice that alter the actuarial balance and in many cases the most basic principles of Law? What do we know about the coverage of the National, Provincial or Municipal state and the cost of intermediaries?
When we travel across the country, Do people know that “hoax” coverage certificates are sold in some places and perhaps in collusion with the political authority? How unprotected are we against insurance companies that do not meet basic standards if an accident occurs?
Along with these painful realities, there are very good insurance companies operating in our country. I had the privilege of holding executive positions and responsibilities in the public function as regulator of the insurance activity. I learned to greatly value the competent and career public official, so often imprisoned by political limitations.
I was also able to learn how many companies in the sector operate. What would be the problems of the sector? The economic-financial situation that generates operational, solvency problems (or even liquidity?). Inflation, calculations of incurred but not reported (IBNR) claims that impact reserves, an underdeveloped and diversified capital market. The maximum amount of coverage that loses value relative to inflation. Justice fails above the contractual limits. The balance sheets of insurance companies that do not represent the current situation and with investments valued at technical value or sub-reserved. The premium that becomes ridiculous because insurers also compete with discounts, leaving aside the legal mandate of “sufficient premium”. And the list could go on. Other issues such as the dollar trap or the import ban impact the availability and cost of spare parts (car insurance) and consequently its operations.
Unfortunately, there is no common agenda among the companies in the sector in terms of “best practices” or proactive public policy proposals. Who should be the arbiter of this kind of “match” between insurer and insured, the National Insurance Superintendence, has lost trained technical personnel, reducing its power of control over important issues.
We need to be protected. The insured is not a consumer in the traditional sense of commercial dynamics. Along with insurers, it plays a citizen and supportive role by contracting insurance that in some cases is mandatory. Just as private actors must provide efficiency, the State must provide legal certainty. If premiums are charged, it is necessary to require the insurer to have sufficient capital support and technical reserves to cover eventual and potential claims. For each policy that is issued, the exposure to risk is greater.
What is the plan for insurance supervision in the coming years? What is the insurance agenda as state policy? Who are the actors willing to not allow the bad practices of certain insurers and defend honest officials? Who represents the sector and the insured before politics? Short-term problems should not be an excuse for not addressing substantive and strategic proposals for the sector. One of the heroes of our country, Manuel Belgrano, was the forerunner of insurance as a legal institution in Argentina. May his vision of his country inspire those of us who participate in this essential sector of our economy.
*Guillermo Plate is a director at Infomedia and former Vice Superintendent of Insurance.
by William Plate*
