AM: What do you see as one of the most significant current developments in automotive-related insurance?

Jair Marrugo: The way in which it is marketed and sold, how to engage with the customer. It is still heavily reliant on point-of-sale, but that has become saturated.

Realistically, it’s only possible to sell two to three products via point of sale. While it is vital to maintain that relationship with a customer and to maintain the penetration levels that already exist in that channel, it is actually the minority of customers who buy insurance at that point. That means the majority of customers leave the dealership without an insurance product of any type. We understand that dealers only have limited capacity to present other insurance products at the point of sale and that is why we have been developing alternative distribution channel options.

By 2020, we expect 50% to 70% of leads to come through digital platforms and that is why we have developed a click-and-buy portal for dealers to add products. It allows them to choose products such as warranty, tyre and alloy, roadside assistance and MOT insurance to distribute online, either through a link from their own websites or through their own email campaigns. This multi-touchpoint approach encourages both sales and retention.

It gives the dealer the opportunity to meet more of their customer’s needs throughout the ownership lifecycle, but without having to try to introduce a fourth or even fifth product at point of sale. The focus is on 100% of a dealer’s customer base, not just the traditional 30-40% that buy insurance at point of sale.

 

AM: What challenges do insurance providers face on the regulatory front?

Jair Marrugo: The automotive insurance sector is already one of the most highly regulated, especially with regard to GAP, but not all players have adjusted to the culture of total compliance. Again, one of our services is designed to support dealers in ensuring a compliant sales process, including the collection of customers’ ‘demands and needs’ and recording them to form a robust audit trail.

That is reflected in our USP – everything from claims management to IT is in-house, under one roof. It enables us to maintain control of the whole process, ensuring top-quality service to our customers in a way that is fully compliant.

We expect more regulation within the entire F&I sector, focusing on what the customer actually needs and in accordance with FCA principles.

How important is automotive-related business for Mapfre compared with its travel and home insurance divisions?

Our gross income for last year was £190 million, of which travel accounted for £128m and automotive £58m, with the balance coming from home cover. Just more than 90% of revenue from automotive is generated by GAP.

Mapfre Warranty (the automotive side of the business) employs 80 people out of 500. It handles about 15,000 claims a year, with a presence among 290 dealer groups operating from 1,200 sites.

Bearing in mind our presence in Europe, the US, South America and the Middle East, the UK accounts for 30% of automotive-related revenues.

With GAP our number one product in the UK – it is by far the biggest developed market for GAP – one of our growth opportunities is to develop this side of the business in countries such as Italy and France, where the current demand is on extended and used car warranty.

Similarly, there are opportunities to introduce the compliance culture to other countries outside Europe, and the US, where it is less developed.

 

AM: What effect will Brexit have?

Jair Marrugo: Short-term, we don’t see any profound consequences. Eventually, new car prices will rise, but alongside that we expect to see an increase in volume for used. Overall, there is that element of uncertainty that is preventing strong commitments in important business decisions.

Brexit is one issue, albeit important, in a market that continues to change and we have to adapt, be agile and quick to react to what the customer is saying – engage and enable is a key part of management’s responsibilities.

Miss opportunities and you pay the price. It’s very difficult to make up lost ground. One example was our failure to provide a multi-channel proposition for a major manufacturer.

You’ve been based in the UK since 2011 and before that you spent time in five countries, including 10 years in Latin America. Where would you prefer, given the choice?

With Columbia my place of birth, of course I have strong ties with that part of the world. But I enjoy living in the UK – apart from the rain.

One of the things that has really impressed me is the amount of charity work that is done in this country. It shows a spirit of looking after one another, how people rally round. As well as caring for our five-year-old son, my wife is actively involved in one charity looking after the vulnerable and elderly.

 

AM: How do you relax?

Jair Marrugo: Spending time with my family and playing golf. Though, with a handicap of 25, I’m rubbish.

Chris Phillips