The Business Year Special Report
Sang-Joon Lee, CEO, Korean Re Colombia
With the low penetration rate for the insurance sector in Colombia, Korean Re sees opportunities to introduce new products to Latin America.
BIO Sang Joon Lee graduated from Yonsei University in economics in 2002 and joined Korean Re in 2003. He worked at Korean Re representative offices from 2013 to 2016 and is currently the CEO of Korean Re Colombia. He has extensive experience in property treaty underwriting in Latin America, Europe, Asia, and others. What is the strategic importance of Korean Re’s expansion into Colombia, both in terms of local market opportunities and as a gateway to the rest of Latin America?
In the reinsurance world at present, when we talk about Latin America the de-facto center is Miami, where many brokers and a large number of reassurers are located. However, we have decided to come to Colombia as it is now becoming the second reinsurance hub. A lot of reinsurers are pulling out of Miami and are actually establishing offices in Colombia. There are a couple of advantages to this. The first is that geographically it is quite close to Miami, Mexico, and Argentina. Second is that you can underwrite business here and, on behalf of the company, underwriting is permitted, which is positive. In addition, there is a lot of high quality manpower here in Colombia with strong expertise and many advantages in the human resources market. On top of this, living and operational costs are low. Those were the reasons why we selected Colombia as our hub for the Latin American business, so Korean Re will be operating from Mexico to Argentina, including the Caribbean, from Colombia. Our goal is not just to have a bigger presence in the market, but also gather information. The reinsurance world is a market that is driven by people and brokers and is not a unified market as the stock market is. Relationships are hugely important, so the reason I came here is not only to establish business but to establish better relationships with our existing clients. From South Korea, we did not know if things were priced well and if we were attracting good businesses, so by coming here we are able to qualify the business that we had and also expand. We wanted to have transparency in all the information that we were actually getting in the market and in the region.
What are your immediate priorities for the Bogotá office?
We first aim to gain a presence in new areas and diversify our portfolio. For example, we are currently exposed to earthquake-prone territories such as Colombia, Ecuador, and Chile, so the aim is to expand in other areas, such as South and Central America. Mexico is also a highly sophisticated market that will take time to develop in.
What trends are you seeing in the insurance sector for Colombia and the region in terms of new products and services required?
This country and region have a low penetration rate, which means that there is a lot of room to grow in. In Korea, the penetration rate for the insurance sector including life and non-life is about 12%, but in this region it is on average about 2 or 3%. That means that there is a lot of need for new products. We see many opportunities, which means we may suffer losses in the short term, but in the long term there might be much more demand for reinsurance capacity. Reinsurance companies are facing a lot of risk and challenges, which means that there is room for us to innovate new products, especially via South Korea, from which there are a lot of products that can be introduced to Latin America.
How would you assess the current capacity in Colombia to adopt or implement digital solutions in the insurance sector?
Honestly speaking, it is not as developed when compared to a country such as South Korea. This country’s economy has historically been focused more on natural resources and agriculture, which were not as available in South Korea, and thus Colombia did not require South Korea’s early dedication to technology. In the end, digitalization it is not about Colombia or Latin America, but a vital global trend. That said, many companies here are making strong progress in this area. COVID-19 has also helped to strengthen efforts to implement new technological solutions, although it will take time.
What is your outlook for 2021?
I see a lot of opportunities. Infrastructure development is slow but there is great potential and many ongoing projects. The government is also working hard to attract foreign investment. There are many, risks, however, including COVID-19. There are large gaps in the market and the opportunity to introduce many new products.