With over 8 years of experience in the technology sector, Giuliano Coluchi is the Managing Partner and Co-founder of the Paraguayan Insurtech Chamber, an organisation focused on promoting innovation and the use of technology in Paraguay’s insurance industry. He is an innovation consultant, speaker at conferences, and trains and teaches courses on technology, always with a practical and up-to-date approach. Additionally, he is a licensed insurance agent, providing him with in-depth knowledge of the insurance industry. His true passion lies in combining insurance with technology, striving to optimize processes and create innovative solutions that transform the insurance industry.
The Insurance Sector in Paraguay: A Sleeping Giant
Paraguay’s insurance market is a growing sector with significant challenges. As of today, the Central Bank of Paraguay has registered 35 insurance companies, classified into multinational insurers, bancassurance, traditional insurers, and cooperative insurers.
By June 30, 2024, the Paraguayan insurance sector experienced an 11.7% growth, reaching approximately USD 500 million in production and USD 99 million in profits. The top 10 insurance companies control around 67.59% of the market. Within the industry’s portfolio, auto insurance represents 42% of the total, making it the most widely recognised product among Paraguayans.
Despite sustained economic growth in recent decades, insurance penetration remains low compared to other countries in the region, reaching only 1.1% of GDP, while the regional average stands at 3%.
The Lack of Mandatory Insurance: A Risk Factor
In Latin America, the number of mandatory insurance policies is lower compared to other regions, leaving many individuals and businesses exposed to risks that can negatively impact local economies. Paraguay does not have mandatory insurance, representing both a growth opportunity for the sector and a key tool to enhance the population’s financial protection.
Having insurance policies such as auto and liability insurance ensures that those affected by accidents or unforeseen events are not left unprotected. Additionally, it would encourage a culture of prevention and financial planning. Implementing mandatory insurance in key sectors would not only reduce the financial burden on the state during crises but also boost the insurance market, strengthening economic stability in society.
The Role of Intermediation in Insurance Commercialisation
Insurance in Paraguay is primarily marketed through agents and brokers, who are legally authorised to act as intermediaries between clients and insurers. By 2023, insurance agents accounted for 54.71% of total premium production.
Since insurance products feature complex technical terms and numerous clauses, professional advice plays a crucial role in the decision-making process. However, sector digitalisation and the emergence of new technological tools can enhance access to clear information, streamline policy acquisition, and strengthen intermediaries’ role in commercialisation.
Insurtech: The Technological Revolution in the Insurance Sector
The term “Insurtech” (insurance + technology) refers to the use of technology to modernise insurance services. Globally, this movement has revolutionised the industry with solutions that automate processes, personalise products, and reduce costs. Paraguay is no exception.
The Paraguayan Insurtech Chamber (CAPI), established on April 3, 2023, aims to promote knowledge exchange, experiences, and best practices between technology companies and insurance sector players in Paraguay. In recent years, Insurtech startups have emerged in the region, seeking to transform the way insurance is contracted and managed.
Traditional insurers have also begun adopting technology to remain competitive. Many have implemented digital platforms for quotes, customer service, and claims processing, reducing turnaround times and improving the user experience.
Benefits of Insurtech for Policyholders
The digitalisation of the insurance sector offers multiple benefits:
Faster and Easier Access:
Clients can obtain quotes and purchase insurance from any device without the need for physical travel.
More Agile and Transparent Processes:
Automated procedures reduce bureaucracy and waiting times.
Reduced Fraud:
Technologies like artificial intelligence and blockchain help prevent fraud in claims and document authentication.
Greater Personalisation:
Insurance policies can be tailored to individual needs, from flexible coverage options to accessible payment plans.
Challenges and the Future of Insurtech in Paraguay
Despite technological advancements, challenges remain in the Paraguayan insurance industry. A lack of financial education, low insurance culture, and resistance to change are barriers that must be overcome to achieve greater insurance inclusion in Paraguayans’ lives.
Insurtech, along with appropriate modernisation policies and regulations, has the potential to bridge the existing gap in Paraguay’s insurance market. Digitalisation, automation, and access to personalised insurance can elevate the sector to a new level, ensuring greater financial protection and a more efficient and accessible industry for all.
