Manuel Bauer: “In China, for example, the insurance penetration rate stands at only around three percent. This means that for every 100 yuan (12 euros) that the Chinese economy generates, only three yuan (.36 euros) are spent on insurance products. The penetration rates are similarly low on other emerging markets. In the US, on the other hand, the penetration rate comes in at eight percent.”
The emerging markets are flagging. To what extent will this trend have an impact on Allianz’s business in Latin America?
Jung: Although the growth rates have fallen, Allianz has been able to forge ahead with its success story. Revenue and operating profit have risen. One particularly encouraging development is the fact that both the life and the P&C insurance business have contributed to this solid result.
And what is the situation on the emerging markets at the moment?
Bauer: Allianz has significantly boosted its revenue and profit in Asia, too. The picture for central and eastern Europe is more mixed. The life insurance business was hit by the abolition of the deposit business in Poland, which has affected total premium income, but not profitability. Then there were the natural catastrophes that had an impact on the P&C insurance business. Nevertheless, the profit for the first half of the year was roughly on a par with the previous year.
Which insurance products and services are particularly in demand on the emerging markets?
Bauer: This varies from country to country. As a result, Allianz does not offer its entire product range in every single country. It is clear, however, that on those emerging markets where prosperity is on the rise and regular incomes are becoming more common, people are showing more of an interest in protecting their possessions against loss or damage. The emerging middle class is also starting to turn more attention to issues like healthcare and retirement provision.
Jung: You can see this, for example, from the growing demand for auto insurance, which reflects the fact that an increasing section of the population can afford cars. Products that are tailored to the particular needs of local target groups are also proving to be successful. In Columbia, for example, Allianz recently launched a product allowing women to protect themselves against possible risks associated with pregnancy and childbirth for the equivalent of two euros a month.
In the industrialized nations, the trend towards digitalization is continuing in all areas of life.
How important is this issue on the growth markets?
Jung: Without digitalization, many people in the up-and-coming economies would find it virtually impossible to access certain insurance products and services. This is why we have invested an amount running into the double-digit millions in the development and implementation of systems like the IberoLatam platform and the establishment of mobile sales systems over the last few years. In Brazil, we are making active use of the Internet and have actually received a request from the police in New Zealand to see whether they can use our viral marketing campaign against drunk-driving.
Bauer: The size of some countries alone means that digitalization is a must. The best example of this is Russia, where you have to cross nine time zones to travel from one end of the country to the other. Insurers have to be available everywhere. In this respect, digitalization is helping us to bring our products to customers located in even the most isolated areas.
How do you assess the future business outlook for the emerging markets?
Bauer: The emerging markets still offer huge growth potential for Allianz. In China, for example, the insurance penetration rate stands at only around three percent. This means that for every 100 yuan (12 euros) that the Chinese economy generates, only three yuan (.36 euros) are spent on insurance products. The penetration rates are similarly low on other emerging markets. In the US, on the other hand, the penetration rate comes in at eight percent. This shows the sort of opportunities still offered by the emerging markets. We have laid the foundation for achieving further profitable growth and outperforming the market in the up-and-coming economies.
