ON PAPER, THE Brazilian insurance market looks vibrant: economic growth exceeds 5%; there are new products for an emerging middle class long starved of even basic products and new channels of distribution. And a slow legislative thaw is also helping generate strong revenues.
The market has been growing at a double-digit rate and is expected to continue to grow by about 15% a year until 2012, according to the Federação Nacional das Empresas de Seguros Privados e de Capitalização (Fenaseg), the industry body association. In five years, the outstanding in billed premiums will double from R$30 billion ($14 billion) and assets in the industry will reach R$400 billion, says Samuel Monteiro dos Santos Júnior, chief financial officer of Rio de Janeiro-based Grupo Bradesco de Seguros e Previdência, Brazil’s largest insurer.
Compared with insurance in developed markets, the industry in Brazil is relatively small, at just 3% of GDP, says José Tadeu Mota, head of investor relations at independent insurer Porto Seguros in São Paulo.
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"Brazil has a system that was created in the 1950s and that has been seen by the whole world as inflexible, but it is much more secure"
Samuel Monteiro dos Santos Júnior, Grupo Bradesco de Seguros e Previdência |
Typically, the relationship between GDP and the size of the insurance market is tightly correlated, as is the case in the US, UK and Japan, notes Monteiro dos Santos Júnior.