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Brazilian insurer HDI Seguros is sprinting into a digital future

HDI Seguros with the “Go Digital” innovation programme

When Murilo Riedel stepped onto the stage last year, he triggered a storm of enthusiasm with a casual remark. The regional directors of Brazilian insurer HDI Seguros S.A. were gathered in the audience, together with all the managers and staff of the Head Office in São Paulo. The new Chief Executive Officer, in post since December 2016, announced that henceforth all the employees no longer needed to wear a tie. The whole audience leapt up from their seats to celebrate. A standing ovation ensued.

Although setting aside ties may initially appear to be relatively trivial – at HDI Seguros this was a tangible signal heralding a change in culture. “We are facing deep changes,” said Murilo Riedel. “The necessary pace for implementing a lot of projects running in parallel demands a new form of working together. If we are to operate within this new dynamic constellation, we need to streamline the bureaucratic routines, introduce flat hierarchies, optimize our time and reassess old formalisms.” He went on to say that the new dress code was a symbol for the new order – discarding ties did away with part of the outer profile and the focus would then be more on the content of the work.

The change is not simply a matter of serendipity. “Brazil is experiencing the worst economic crisis in 100 years,” said Murilo Riedel. As a result, the domestic trade in new cars has collapsed. Yet insurance of these vehicles is the main business of HDI. The automobile business has slid into a soft market with low premiums. Previously, insurers were able to compensate for a trend like this through profits in investment. However, the dire economic situation means that this no longer works. And to make matters worse, the number of car thefts has risen and galloping spare part cost makes settlement of claims increasingly expensive. “This radical change in the insurance market means that our traditional operation model in Brazil became unable to produce the results necessary for our operation.”

Murilo Riedel responded to the situation with a massive innovation programme. It is called “Go Digital” and this slogan has become something of a battle cry for HDI Seguros since then. “The programme is intended to reposition HDI in Brazil,” said Murilo Riedel. Its main purpose is to provide answers to two key questions. What costs can be reduced by digital processes? And where can HDI generate value added through digital solutions?
One example of the powers of invention exhibited by the Brazilians is a form of digital auction platform for motor-car spare parts. HDI Seguros has its own dedicated service centres where employees initially inspect the damage before it is repaired. This allows many parts to be repaired which would otherwise have to be ordered new. If replacement parts are indeed required, HDI employees then look through the offers of dealers on their own digital spare parts exchange. The order is ultimately placed with whoever makes the best offer.

Another unique development is that HDI has teamed up with Spanish bank Santander to establish a digital insurer. Going forward, the new company operating under the name "Santander Auto" will offer exclusively motor insurance products through Santander's distribution platform. Santander is the third biggest bank in Brazil and number one in the country in the car financing business: When customers in Brazil purchase an automobile, they receive a finance offer from around 9.400 cooperating dealers who are part of the scheme. Santander is in the background providing the loan. The automobile dealers use the bank’s online tool with just six standardised questions to clarify the conditions under which the customer can be offered a loan. This is where HDI comes in. On the basis of these answers from the customer, the company will in future calculate the premium for the motor insurance. This incorporates HDI seamlessly in the processes of the bank. At the end of the process, the customer receives finance from Santander for the car and an insurance from a single source. The joint venture is the risk carrier for the motor policy. This collaboration will help HDI to climb from sixth place in the motor insurance market to fourth place.

The start of a new era in São Paulo is also marked by the workplace of the employees. At the beginning of December last year, the company moved into a new building. HDI has set up open-plan and modern workplaces on three floors. The few walls that exist are made of glass so that they no longer constitute barriers. The teams sit closely together in order to promote agile working. “The change of office was needed for fully implementing the new ‚Go Digital‘ processes”, said Murilo Riedel. “The rooms allow the interaction of areas working now very close, for example the actuaries and IT.” That saves time – and it is known to be a valuable resource.