Brazil's Insurance Industry / by Mark Langevin

This year the International Monetary Fund (IMF) published the report,

BRAZIL INSURANCE CORE PRINCIPLES DETAILED ASSESSMENT OF OBSERVANCE,

which serves as a concise survey of the Brazilian insurance industry.  The report assesses Brazil’s compliance with the Insurance Core Principles of the International Association of Insurance Supervisors (IAIS), as adopted in October 2011. Dr. Rodolfo Wehrhahn, Technical Assistance Advisor, in the Financial Sector Oversight Division of the Monetary and Capital Markets Department, IMF conducted the survey in 2012.  Brazil is one of the first nations to be assessed under the 2011 version of the ICPs.

The report shows the Brazilian insurance marketplace to be in rapid expansion fueled by an increasing number of Brazilians purchasing insurance services, the rising per capita expenditures on insurance premiums, and the consolidation of the industry around the largest banks and a network of increasingly organized brokers.

According to the IMF,

“The insurance industry in Brazil is an important part of the financial sector. In the last five years the assets managed by the sector supervised by SUSEP has more than doubled. At the end of 2010, the total assets of the insurance sector amounted to
USD 225 billion or 9.5 percent of GDP. It is the largest insurance sector in Latin America accounting for fifty percent of gross written premium in the region, and holding around 1.5 percent of the world premium. In 2010 the total written insurance premium amounted to USD 75 billion. The market is dominated by insurers belonging to large banking groups and Brazil is the host jurisdiction of all major international insurers together they hold over eighty percent market share in terms of assets.”

“In the last few years the insurance industry experienced an explosive growth doubling the premium between 2005 and 2010 however, growth potential remains significant. The long lasting financial and currency stability, steady growth of the economy, credit availability and insurance saving growth promoting policy, like the implementation of tax incentives resulted in continuous growth of the insurance industry for the last 10 years. In particular the credit expansion generated growth in credit life, mortgage, homeowners and motor insurance. Notwithstanding this surge in insurance, currently the average Brazilian spends less than US$ 350 in insurance per year and the insurance penetration is only 3.5 percent or just above 50 percent of the OECD countries’ average. Much effort has been dedicated to encourage further growth of the insurance sector, in particular on the low income sector, with supportive statements at the presidential level and a Micro-insurance specific regulation having been enacted at the end of 2011.”

“The market dominance of the large bank related entities is further increasing.  At the end of 2011 there were around 26 insurance groups and 115 active insurance companies. However, the three bank-related insurance groups, Itau, Bradesco and Banco do Brasil controlled around 65 percent of the insurance market in terms of assets either directly or through strategic alliances or exclusivity agreements. The top ten insurers, six of which are part of bank groups, accounted in 2011 for 80 percent of the life insurance market in terms of assets. In the nonlife sector represented by the composite insurers, the dominance by bank related groups is not as strong, where the top four bank-related insurers accounted for 43.7 percent of the business in terms of premium.”

“The market dominance of the large bank related entities is continuing to increase. At the end of 2011 there were around 26 insurance groups and 115 active insurance companies. However, the three bank-related insurance groups, Itau, Bradesco and Banco do Brasil controlled around 65 percent of the insurance market in terms of assets either directly or through strategic alliances or exclusivity agreements. The top 10 insurers, six of which are part of bank groups, accounted in 2011 for 80 percent of the life insurance market in terms of assets. In the nonlife sector represented by the composite insurers, the dominance by bank related groups is not as strong, where the top 4 bank related insurers accounted for 43.7 percent of the business in terms of premium.”

Read the report here.

Brazil’s Regulatory Agencies

Conselho Nacional de Seguros Privados

http://www.fazenda.gov.br/portugues/orgaos/cnsp/cnsp.asp

The Superintendence of Private Insurance (SUSEP)

http://www.susep.gov.br/english-susep/index