Principal Officer (CUNA Mutual Group - Jamaica)

As you know, any foreign investor who is looking to enter Jamaica would want to be assured that the country has a robust financial sector. How would you describe the financial sector in Jamaica today?

I think that we have quite a history in the financial sector in that we had a period where there were 80-90 financial institutions for a population of 3 million people. There was a crisis and that went down to 25-30 but that crisis strengthened the roots of the system because the authorities updated our banking and insurance laws to make sure that they were modern. They were very outdated and that was part of the reason why we had this crisis 15 years ago but now are much stronger. I think we have a lot of very efficient companies here and some of those have gotten efficient because of the economies of scale that they have achieved and others have employed leading edge technology to get there if they don’t have the economies of scale. The three main sectors are banking, insurance and near banks plus credit unions.

CUNA Mutual Group offers financial services to credit unions and other mutual organisations in Jamaica. How would you describe the credit union movement in Jamaica?

The credit union movement is extremely strong in Jamaica. There are 990,000 credit union accounts in a population of 2.7 million. About half of the 2.7 million are under the age of 18 so 990,000 accounts out of 1.3 million adults is a huge penetration so it is extremely popular and vibrant, and the future looks great for the 37 credit unions that exist in Jamaica.

I think that globally Jamaica is one of the highest penetrations of general population that have a credit union account. If you look at the US, you will find about 18% of the population are credit union members whereas in Jamaica it’s 30%+.

What would you say are the biggest benefits of credit unions?

The main benefits are that each depository is an owner of the institution. So you get your returns each year when they declare their profits whereas in a bank, you go in and get, for example, 6% interest rate, and that’s your return on your savings whereas with a credit union, you can get more or less depending on the profits of the credit union.

Also at the annual meeting you are allowed to go in and voice your opinion about how things are going so it’s a very democratic institution and I think that’s part of the reason why they are so popular.

A lot of credit unions were started by employers for their employees but they’ve grown beyond that. Where some used to be like a telephone company employees credit union, it would have expanded into a geographic credit union. So there used to be about 50+ credit unions years ago but there are 37 now so there have been mergers. They want to get critical mass in some cases so many have merged but the movement is very strong and it’s a very popular form of making your deposit and getting your loans because some people feel that the banks are for the middle and upper middle class. If you’re a taxi driver, teacher or policeman, you feel more comfortable going to your credit union especially if the credit union is similar to people like yourself. The police and teachers, for example, still have their own credit unions and the members feel that connection with the other members of that credit union.

With more than 70 years experience and 5,500 staff worldwide, CUNA Mutual is a leading financial insurance provider that specialises in serving co-operative groups in more than 30 countries. What would you say are the reasons behind CUNA Mutual’s ongoing success worldwide?

I think we decided very early that the credit union system was going to be our partner in marketing our financial services. We don’t believe in the eyeball-to-eyeball selling of insurance like many of our competitors do. We prefer to have the organisation of the credit union market our products to their members in a B2B fashion for us and it has worked extremely well.

Also what keeps us safe is our investment philosophy, which is very conservative. So during the financial meltdown of 2008, we barely had any problems. We had a few investments that went bad but not to the point that it would collapse the company.

CUNA Mutual’s head office is in Wisconsin. When did CUNA Mutual open an office in Jamaica and why?

Jamaica was the first international territory for CUNA Mutual in 1950. It was because the credit union movement had become quite large in Jamaica and had asked CUNA Mutual to provide insurance services in Jamaica.

The credit union philosophy is that if you borrow money from a credit union and you should die, your survivors shouldn’t be burdened with that debt. That statement was the genesis of CUNA Mutual. We were formed in the US by credit unions because they want to make sure that if somebody dies and has a loan with a credit union, someone discharges that debt. That’s one of our major products.

But you do offer credit unions and their members more than life insurance though?

Yes, in the US we do. In Jamaica it’s a subset of the US products but in the US we offer annuities, property and casualty insurance as well as life insurance. In Jamaica we offer life insurance and products that give you incentives to save long term. Very simply speaking, a credit union will take a deposit and offer a customer some life insurance so that if they are trying to save for a long period to reach a lump sum and they die half way along the way, we would fulfil the lump sum that they are trying to save and their beneficiaries get the lump sum. It improves the credit risk management of the credit union because if someone dies legally you can’t go after their relatives so the insurance fills up that gap.

Who are CUNA Mutual’s biggest competitors?

Sagicor, Guardian Life and Scotia Insurance are three of our biggest competitors. They have, however, not been able to sell to the credit unions because we have gotten a certain loyalty from the credit unions because we were formed out of the credit union system so we have roots in that.

So would all of your clients be credit unions?

About 95% of our business in Jamaica is credit unions and 100% of the credit unions buy at least one product from us. We also have groups like Churches so the Seventh Day Adventist Church is a large customer of ours. They have 200,000 members in Jamaica and we have other cooperatives that are customers.

Are there other companies that target credit unions like you do?

There are a couple in the US but they are nowhere near the size of CUNA Mutual. Last time I checked we had US$17 billion in assets. Jamaica’s GDP is like US$15 billion.

We sold out of Australia and Canada so we are now focusing on the Caribbean. We are in 17 countries in the English-speaking Caribbean and a dozen that speak Spanish. We treat the English Caribbean as a single company servicing 17 countries. The regional office is in Trinidad but I am based in Jamaica.

Innovation is essential for the long-term survival of any company. How does CUNA Mutual Group incorporate innovation into its work and stay competitive?

Firstly, we listen to the credit unions to see what it is that they feel we should be doing to help them further.

Secondly, we believe in technology that can give us a competitive advantage in being a low cost producer. We are currently installing a state-of-the-art system for the English Caribbean that will give us a leapfrog in terms of efficiency and customer service. As a quick example, what we plan to do is have credit unions who are our customers be able to go onto our system and look up their members’ accounts who have bought our insurance through the credit unions. Right now if a credit union member goes into a credit union and says this insurance I bought from CUNA Mutual through you and can you tell me what were my last three payments? The credit union has to call us to look up on our system so we are going to give credit unions access to the system.

We give the credit unions a competitive advantage because the banks here have insurance affiliates but we are their insurance affiliate and it helps them to be able to compete and to say here is your loan and it comes with insurance at no cost. Whereas if you borrow money from the banks, you have to pay to get insurance. So that’s one of our key competitive advantages.

One of the cornerstones of our business is a family insurance program. We are the only ones who do it. We have a policy whereby you can put your parents, spouse and children on the same policy and there’s no medical requirement. That’s one of our flagship products that is separate from the insurance and your loans, rather is for your final expenses. There are 250,000 lives on that family insurance and I’m willing to say that there’s no other life insurance policy in Jamaica that has that many lives on a single plan.

We spoke earlier about Jamaica’s robust financial sector. Is CUNA Mutual working with JAMPRO or doing anything to promote the company’s contribution to this sector?

We are members of the Insurance Association, which means that we take part in lobby efforts to strengthen the industry by having legislation changed and things done. When called upon by JAMPRO, we are more than willing to tell our story about Jamaica and our presence in Jamaica for almost 60 years.

Many of Harvard Business Review’s readers will be business people who have an interest in doing business and investing in Jamaica. What can CUNA Mutual offer them?

Of course if they have employees here, we could always serve them if they join a credit union but there’s a whole other angle. The financial services needed by corporations who are setting up here could be met by one of many financial companies here but for those who want to come into the special economic zone, we have an International Financial Services Act that is being promulgated and promoted. They are trying to get international companies to set up in Jamaica not necessarily to do local business but to do offshore business. I think that could pay big dividends for us if we do it right especially with the SEZs because the companies that come into that will need trade financing at a level that Jamaican financial institutions can’t provide. I think that a whole new set of companies is going to come in based on the offshore financial services that we are trying to promulgate. So depending on the type of companies that come, we might be interested in targeting them.

We are English-speaking, are one hour from Miami, operate in the same time zone as US and have a fairly well developed telecommunications system so I think that Jamaica is ripe for investment. The middle class I think is growing and all of the elements are there for a strong domestic economy. The way I look at the IMF program is that we were like a boat on the water with a hole in the bottom. The IMF program has allowed us to patch that hole so we are not sinking anymore but the engines cannot be powered by the IMF. Overseas investments, for example, need to come to Jamaica. So we’re sitting still and are not sinking anymore, but we need that push. With oil and energy prices coming down, we are poised to attract FDI and growth. If we don’t do it now, we never will.

Corporate social responsibility is an invaluable way for companies to give back to the communities in which they work as well as their staff. Is the CUNA Mutual Group Foundation involved in any projects here in Jamaica?

The Foundation is basically in the US but in the Caribbean, we sponsor a few things. In St Lucia there is an annual Youth Forum that addresses a lot of youth issues in the region. In Trinidad we participate with the credit unions that go out and do a lot of CSR initiatives. In Jamaica we do something different. We did an initiative with the Credit Union League of Jamaica, which went to a home for indigent people. It’s well known in Jamaica and is called Missionaries Of The Poor, and it provides a home to the poorest of the poor so for one day we served them meals etc. We have also provided computers and used furniture to a basic school that needs help so our CSR work is not highly structured: as the need comes to us, we help good causes and do our fair share.

The readers of Harvard Business Review include many of the world’s most influential business and political leaders. What message would you like to send them about Jamaica and about CUNA Mutual Group?

CUNA Mutual has been a strong believer in the Caribbean and we have been very fortunate to have invested in a territory where credit union membership is above the world average. As a result, it has given us very favourable financial and other results and for Jamaica in particular, we have been here as a branch in Jamaica for 50+ years. We have taken the decision to take it one step further and establish a limited liability company here in Jamaica so we will be a full-blown corporate citizen of Jamaica within the next 3-6 months. We have submitted our application so we are increasing and deepening our roots in Jamaica because we believe it is a good place to invest and it has served us very well for the strategy that we have chosen.