Unmasking the Plusses

Accepting a "new normal" requires parallel new modes of conducting governance, executing commerce, and reaching the consumer, not least for tougher-to-sell items such as insurance.

❱ COUNTRIES THE WORLD OVER are today contending with the prospective reset in social, commercial and, by extension, environmental dynamics. As elsewhere in the world, Colombia’s mandatory quarantine and curbed travel have for much of 2020 together paralyzed the services sector. And meanwhile, closed businesses and resulting unemployment have baked a legal hot potato of unpaid rent, with its own economic fallout rippling across stalled economies.

A SPUR TO EFFICIENCY

On the plus side, the impact of Covid-19 has forced the hand of business and industry towards swifter digitalization. At the governmental level, as recently as November 2020 Colombia announced receipt of a USD250 million loan from the Inter-American Development Bank (IDB) directed at streamlining its tax and customs administration. The program involves the digital transformation of Colombia’s National Tax and Customs Directorate (DIAN), to bolster its tax collecting and foreign trade facilitating function. Primarily under scrutiny will be the efficiency of the existing institutional governance and technological management model. The loan will also cover implementation of the new, integrated tax and customs management system based on microservices, where a hybrid multicloud service solution will maximize security and operational capabilities. Such measures are essential regardless of the pandemic but have doubtless been expedited in light of it.

UNDER COVER VISITORS

Colombia’s government extended to end-November its health emergency status introduced by decree back in August—a costly one for tourism revenues, but ultimately an unavoidable one. A related concern has been for the potential overwhelming of the local health service by new COVID-19 cases among locals, let alone from among visitors. In January 2020, hence prior to the pandemic, Colombia’s Ministry of Health had issued a decree ensuring additional resources to bolster the social security system against over-stretch. Subsequently, the Ministry of Foreign affairs has been monitoring all V visa (Colombian Tourist Visa issued to short-stay foreigners) applications for international medical insurance to check that individuals are not likely to make undue demands of the local system to the cost of locals. As the Ministry itself puts it, “The pandemic has revealed the weaknesses of health services at a global level [whereby] as a self-protection measure, medical insurance is being requested.”

POLICY OF TRUTH

As remote working continues to prove a viable alternative to the 3D workspace, citizens are experiencing new ways of accessing and being accessed by businesses. Insurance, indeed, all financial services, being no exception to that rule. Unpredictable events inevitably hit many hard, most notably the unprepared. And just like after a major tremblor – think Turkey in 1999 – earthquake insurance suddenly became a household phrase, later made mandatory in law, so too is health insurance becoming a must-have for many in the wake of the pandemic.

Yet educating the uninsured public as to the merits of cover against illness or disaster, much less as a pillar of their future security, poses certain challenges. And so to counter the rather abstract nature of insurance, digital advertising is proving to be a prime

means of converting today’s consumer into tomorrow’s premium. A study in July 2019 showed that by digital ad spend Fogafín led the pack in Colombia’s insurance and pension plans industry on 25.51% of the industry total. Protección was second on 21.69%. And completing the top-five were Compensar, Seguros Exitos and Sura, respectively on 14.23%, 9.53% and 7.07%.

A FEW NUMBERS

Sector data indicates that as of November 2019, Colombia had become Latin America’s sixth-largest insurance market, sitting on premiums of USD7.8 billion, with an insurance penetration rate (percentage/GDP) of roughly 2.6%. Latin America and the Caribbean overall claim just over 3%, despite accounting for 8.6% of the world's population by UN data. And having grown 50% from 2016, assets under management (AUM) had scaled USD25 billion. Predictably though, rating agency AM Best changed its insurance sector outlook from stable to negative in light of the demands COVID-19 would have on the sector and public alike.

When the era of Covid-19 ends, and new strains notwithstanding, end it surely will, the world will not simply revert to the ‘way things were.’ The last pandemic, some one hundred years before, blighted a world still in the industrial era where geography was an unavoidable reality of business, work, education and governance. Who, after all, can fail to remember that official on a European Parliamentary Zoom meeting inadvertently revealed to be in his underwear? And as the glitches are ironed out one by one, every component of daily life will acclimatize to the digital environment. A point essentially of no return, effective even once humans, as is their habit, once again become complacent about their wellbeing.