With a strong emphasis on the Chilean market, this insurtech of Argentine origin expects to grow exponentially this year, acting as an intermediary of a wide range of insurance services. “We can quote fifty insurers from Latin America in one minute,” says its co-founder and CEO.
2024 will be the year of AI and machine learning in the insurance industry, according to the British agency FintechGlobal. It will also be a year in which the so-called 'embedded insurance' --policies that are integrated into other products or services, such as the purchase of a vehicle, a trip or a rental, preventing the buyer from carrying out additional procedures-- and B2B2C will be heard more in the insurtech sector, one industry that brings together insurance companies with technology, and that also involves accelerators and investment funds.
Incidentally, one insurtech that is growing in the continent is 123Seguro. Earlier this month, the company announced a strategic collaboration with iCar, a used-car sales platform, aiming to simplify and streamline the vehicle acquisition process in Chile.
But this alliance is just one of many that the Argentine-origin firm has in store for 2024.
“Our idea is to double-fold our portfolio of alliances, which in our case went from 15% to more than 50% in terms of generating new clients and we see that this trend is not going to stop, but rather it is going to accelerate,” says to AméricaEconomía Martín Ferrari, co-founder and CEO of 123Seguro.
Founded in 2010 by brothers Martín and Bruno Ferrari, 123Seguro provides services as an online insurance platform in Argentina, Brazil, Colombia, Mexico and Chile. It landed in the latter market in 2019 and it wants to grow there strongly.
This is a goal aligned with the growth that Chile shows in the area, according to the latest study “Latam Insurtech Journey”, by Digital Insurance Latam. The study says that Chile stands out as the second Latin American nation to attract investment to the insurtech market. Brazil leads the region, with a 61% share, followed by Chile, with 23%, and Mexico, with 12%.
INSURANCE IN A MINUTE
Coming from a family linked to the world of insurance, the Ferrari brothers say they have it in their blood. Although growing up wasn't so easy.
“The first eight years of the company we bootstrapped. By not raising capital, we grew only organically and, starting in 2018, when we made our first round of financing, we accelerated growth basically in three verticals: auto, home and life insurance, both for individuals and for SMEs and businesses,” Ferrari explains.
The second axis of growth was opening up to more countries with a regional vision. That strategy has allowed them to grow in Latin America.
“Around 2017, 123Seguro landed in Colombia. In 2019 we opened operations in Chile, then in 2021 we arrived in Brazil through an acquisition, and in 2023 we launched in Mexico,” details the cofounder.
The third vertical of the firm was to iterate from a platform designed for B2C, direct to the consumer, to a B2B2C platform in which they develop different APIs that integrate with distribution partners, such as banks, fintechs, retailers, as well as car dealerships. and employee benefits platforms, among others.
“We opened the platform to various industries and partners who see insurance as a path to monetization, a path to developing their relationship with customers,” Ferrari says. So much so, he assures, that “today, in less than a minute, we can quote more than fifty insurers at the Latin American level."
In addition to simplify contracting, this insurtech offers the solution to any problem when submitting a claim. Additionally, they act as a link between insurers and the public to inform them of the most requested products, and those with problems to help them in turn renew their product offerings based on consumer demands.
“Our proposal is 360; we leave nothing out. Because what we are looking for is that you also have the simplicity of hiring at the moment of truth,” details the founder Ferrari.
Among others, they achieve this by having local teams that go through a training for about 90 days prior to have any relationship with clients. As a highly regulated activity, they are subject to constant review by the regulatory entities in each country.
“The incentives are super aligned on providing good service, because that will make you stay as our customer for life, and that is our goal,” says Ferrari.
INSURANCE CULTURE
The five countries in which 123Seguro is present today account for 85% of the insurance market in Latin America.
“Chile is our fastest growing country: in the last 18 months we have multiplied our client portfolio several times with strategic alliances,” says Ferrari.
Despite everything, there is much more to grow and develop around insurance in Latin American nations, according to the executive.
This is due to the lack of knowledge and lack of culture regarding insurance in general in Latin America.
“When one compares Latin America, the level of insurance penetration in the United States, Europe and Asia is several points higher in terms of Gross Domestic Product. There really is an insurance culture that needs to be built and, for me, it doesn't have so much to do with consumer problems, but rather with the industry itself, which focused on navel-gazing rather than developing quality products and complying with the promise of value. I think that is the great challenge and at the same time the great opportunity: with technology one can simplify, it can be transparent and it makes everything much simpler and easier,” says Ferrari.
The challenge is indeed there for insurtechs. Data from Digital Insurance Latam indicate that although the growth of the Latin American insurtech sector was modest in 2023, at 2%, investment decreased by 44% and a 13% disappearance rate of insurtechs was observed. However, another 71 companies appeared last year, boding a potential rebound for the region.
In the case of Chile, the ecosystem continues to grow at 14% annually, reaching 66 insurtechs and reducing the gap with countries like Argentina. Despite the low level of financing, representing only 8% of the region, the ecosystem receives support from institutions such as InsurteChile, ProChile and other government entities that encourage growth in the region.
“2022 was very complicated in terms of car insurance, due to all the cuts in spare parts supplies internationally, which caused insurance premiums to increase sharply during the end of 2022 and in 2023. We already saw that toward the end of last year and at the beginning of the current one, insurance companies are becoming much more competitive and have a greater appetite for risk taking than they were during 2023”
