Technological development has resulted in the extensive production of new, relatively expensive products such as laptops, smartphones and drones. Owners of such products have become highly dependent on them and are therefore often concerned about the risk of loss or damage. Peruvian insurance companies have identified this need and introduced products such as extended warranties. These products provide coverage for customers who are not used to the traditional means of purchasing insurance, which include:
- finding a suitable broker;
- discovering and evaluating the risks;
- deciding on an alternative that suits the customer's particular needs; and
- paying a premium with an embedded commission.
Instead, such customers require a simpler, faster and more convenient system – a trend that Peruvian insurers have picked up on.
Resolution 2996-2010, Master Regulations for Insurance Product Commercialisation, enacted by the Peruvian insurance regulator (SBS) in 2010, has proven to be – in conjunction with other local legislation – an adequate platform for promoting massive insurance. 'Massive insurance' is legally defined as a standard product that requires no special insuring conditions based on the goods that it covers. Hence, this type of risk protection is applicable to products whose characteristics require only basic insurance, such as high-tech goods. In other words, massive insurance is a form of insurance in keeping with the modern age.
The SBS resolution paved the way for a wider range of agents to offer insurance, created platforms for the commercialisation of massive insurance and enabled less traditional means of contracting, thus expanding the reach of insurance companies and further benefiting clients.
The SBS resolution also increased the sales force of insurers by including promoters and commercial agents. While promoters are employees or contractors of insurers, commercial agents are individual or legal entities that offer insurance services to the public using their own resources and through their own lines of business, but on behalf of insurers under a commercialisation agreement. Similarly, insurers may resort to consolidated and supervised platforms that are already in place for financial entities (also supervised by the SBS), with a view to using their client, distribution and office networks. In addition, insurers may establish selling points in locations other than offices and other orthodox retail spaces. Finally, insurance may be promoted, offered and purchased through commercialisation-by-distance systems, such as telephone, internet and similar means that do not require a personal presence.
Although these provisions may not come as a surprise in the present global context, they were a breakthrough for Peruvian standards in 2010 and it was only recently that the exponential acquisition of high-tech products revealed the convenience of having regulations in place that met the market's needs.
This regulatory effort was achieved without neglecting the protection of the insureds' interests as the SBS resolution includes requirements that must be fulfilled by insurers and are regularly supervised by the SBS. For instance, an insurer will be held liable for every action incurred by agents acting on its behalf – including wrongful acts resulting in damages to the insured – and is directly responsible for the provision of insurance services and risk management. Similarly, insurers should ensure that potential clients are properly informed of the products that they insure and that their agents gather all necessary information. Training in regards to the new distribution channels, which is mandatory, also contributes to the ultimate goal of insurers extending their reach without sacrificing to a great extent the protection of the insured.
Despite the above, the SBS resolution is not flawless and both the pace at which high-tech products are being developed and the manner in which the purchasing of insurance is evolving have enhanced the need for a regulatory update. A lesson learned by the drafters of the SBS regulation is that regulations must try to be ahead of the times, not the other way around, which today is quite a challenge.