MAPFRE, more than a decade of shared growth with the Dominican Republic
The Dominican Republic is hosting the 28th Ibero-American Summit, a meeting aimed at strengthening the link between the 20 countries that make up this community. The Ibero-American Business Meeting is also held around this event, in which MAPFRE is participating along with other significant companies in the region. In this article, we review the history and economy of the country that will bring together the main political and economic players on both sides of the Atlantic for a few days.
Since the 1990s, the Dominican Republic has enjoyed sustained economic growth. The Caribbean nation has experienced a boom in the arrival of international tourists, an increase in foreign investment and a recent surge in domestic demand. It has been during this recent period that MAPFRE expanded into and throughout the country and is now developing into new fields like health and helping local residents recover following difficulties like the destruction caused by Hurricane Fiona, a task that serves as a reminder of how important insurance is in response to adverse circumstances.
When the company touched down in the Dominican Republic in 2000, prospects in the country were soaring following a decade at the top of the Latin American economic progress charts. This growth was cut short by a severe banking and financial crisis in 2003, although despite the crisis, during the first decade of the new millennium, GDP continued at an annual rate of more than 5%. In the following ten years, this trend slowed down significantly and, despite the 2020 hiccup caused by the coronavirus crisis, last year the country experienced one of the strongest recoveries of the region.
This backdrop has seen per capital wealth and productivity come almost on par with the rest of Latin America, having languished at around 60% of the region’s average 30 years ago. At the same time, the domestic market has expanded following the development of the middle class. One the main drivers of the country’s prosperity has been the arrival of foreign currency thanks to tourism, which has seen exponential growth: the country expects to end 2022 having received 7 million tourists, placing it on a par with Argentina and Brazil, two much larger countries, in the fight to be the second most popular Latin American destination, behind only Mexico, the region’s tourism powerhouse.
The challenge of inclusive growth
Poverty continues to pose one of the main challenges facing the Caribbean nation; although huge steps forward have been made in recent years. In 2004, when the impact of the banking crisis was at its worst, the national poverty level encompassed 50% of the island nation’s population, well above the Latin American average, which at the time stood at 42.6%. And extreme poverty in the country, at 20.8%, was more than double the figure for the rest of Latin America, according to figures from ECLAC (Economic Commission for Latin America and the Caribbean), which forms part of the UN.
Almost two decades later, based on the most recent data available (year-end 2021), the poverty rate has dropped to less than half that figure, at 22.5%, below the Latin America average (32.3%). Extreme poverty, in turn, has fallen to 5.2%, also below the regional average (12.9%). And although both variables, both poverty and extreme poverty, increased during the pandemic in the Dominican Republic, it was one of the countries in the region that was least affected by the health crisis.
The Dominican authorities have focused their efforts on achieving inclusive economic growth. However, this challenge also extends to the private sector, and the generation of quality employment is one of the most efficient ways of reducing poverty and improving people’s quality of life; this has been one of MAPFRE’s aims as part of its international implementation and in the Dominican Republic. Each year, the insurance company ranks close to the top in different rankings that assess this aspect, and, among others, ranked in sixth place as regards best corporate and ethical reputation in the Dominican Republic in the 2021 Summa ranking, and was considered as one of the Top 25 Best companies to work for in the country last year, based on a list prepared by Mercado Media Network.
A higher natural disaster risk
The Dominican Republic, on account of its location in the Caribbean, is highly exposed to natural disasters, a circumstance it shares with other countries in the region. In a report, the World Bank warned that the country “remains highly exposed to natural disasters and external shocks that, if insufficiently mitigated choosing the correct policies, may affect the sustainability of growth and prosperity.” Earthquakes and especially hurricanes cause the greatest concerns in this region, which is especially prone to these phenomena that can have devastating consequences and slow down the economy. Hurricane Fiona, which hit the island nation in September, causing significant material damage, is a good example of this.
Natural catastrophes highlight the value of insurance, as they offer fundamental support for the reconstruction of the affected sectors, as is currently the case following the millions of dollars in damage caused by Hurricane Fiona. Aid for events of this nature form part of MAPFRE’s activities in the country, with protection ranging from small businesses or homes to coverage for, for example, major hotels, through its large risk and reinsurance subsidiaries.
MAPFRE in the Dominican Republic
MAPFRE launched its operations in the country in 2005, and in 2007, it became part of PALIC, a company that contributed its more than 70 years of experience in the insurance sector. The new firm, MAPFRE BHD Seguros, has established itself in recent years as one of the most important insurance companies in the Dominican Republic, enjoying a insurance market share of 11.5%, 16.3% in the case of life insurance. It offers services in the main lines of business, both for private insurance (auto, life, home, accidents, international health, etc.) and corporate insurance (covering needs as wide as civil liability or credit insurance to property coverage such as industrial machinery or boats and aircraft).
In 2020, the company achieved another historic milestone when MAPFRE Salud ARS (Health Risk Administrator, which by law are independent entities) was established, having taken over the majority of PALIC ARS’ former business. MAPFRE Salud is a leader in the healthcare sector, with a market share of 28.1%, and 890,000 private customers and more than 67,300 corporate customers, in a country of almost 11 million inhabitants. In total, MAPFRE has more than 40 offices in the Dominican Republic and in the case of both general and life insurance, as well as in health insurance, the company is in the process of innovating and including technology in its services.
MAPFRE’s positive impact on the Dominican Republic goes beyond its insurance activity. This can be seen in the support offered to the Government’s plan to fight Covid, with Fundación MAPFRE setting up the first in-vehicle vaccination post in the country, helping to speed up the process with thousands of immunized residents. Concerning social matters, MAPFRE Salud has supported causes such as Operación Sonrisa, which it is the official sponsor of, helping children and young people who suffer from cleft lip or palate, offering assessments, dental consultations, reconstructive surgeries and post-operative support, including speech therapy for patients, from which thousands of people have benefited.