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Fico brazil insurance round table keynote samy hazan fev_11

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2011 Brazilian Insurance

2011 Brazilian Insurance

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  • 1. 2011 Brazilian Insurance OutlookSamy Hazan – Marítima Seguros February 1, 2011 This presentation is provided for the recipient only and cannot be reproduced or shared without Fair Isaac Corporations express consent.1 © 2010 Fair Isaac Corporation.
  • 2. 2011 Brazilian Insurance Outlook2 © 2010 Fair Isaac© 2010 Fair Isaac Corporation. Confidential. Corporation.
  • 3. Brazilian Insurance Market – Growth ‗09 – ‗103 © 2010 Fair Isaac Corporation.
  • 4. Positive Trends for 2011 Brazilian Insurance Market » General improvement in investors‘ perceptions of risks associated with the country. » Overall tendency towards lower long-term interest rates and stronger currency helps in several ways: » Greater economic stability is conducive to the development of non-life insurance » Greater availability of long-term local currency assets is helpful for the development of organized savings. » Credit growth is driving private consumption – historically the most significant driver of real GDP growth (boosted by government stimulus) » For non-life insurance, cars and housing offer high growth potential, as both these markets are under-penetrated.4 © 2010 Fair Isaac Corporation.
  • 5. The locus of optimism and growth has changed permanently for emerging markets5 © 2010 Fair Isaac Corporation.
  • 6. Events Shaping Brazilian Insurance Market » The upcoming Olympic Games 2016 have boosted public spending on infrastructure projects, helping in increasing the employment levels and the income levels, further boosting the insurance market. » Brazil as the host of the World Cup in 2014 will further spur infrastructure investment and employment health. » US and Euro economic weaknesses will take a toll on export levels. However, higher than anticipated Chinese demand should boost export growth both this year and next. » Banco do Brasil‘s entre into the market (with new partner Mapfre) could trigger competitive pressures. » The Itaú/Unibanco merger - noteworthy as part of a changing competitive landscape » Porto Seguro and Itau Unibanco merger of their residential and auto-insurance operations became Brazils largest auto and residential insurer, with more than three million auto policies and more than one million residential policies, and the third largest Brazilian insurer overall. Source: Mondaq, Brazil: Growing Pains In A Newly "Opened" Reinsurance Market, March 20106 © 2010 Fair Isaac Corporation.
  • 7. Brazilian Non-Life Insurance Market7 © 2010 Fair Isaac© 2010 Fair Isaac Corporation. Confidential. Corporation.
  • 8. Brazilian Insurance Non-Life Market Considerations » Insurance is of high importance to the customers and, in most cases, not a legal requirement (except for DPVAT, compulsory people injury liability for automobiles) » However, consumer loyalty in the sector is low with many willing to shop around (leveraging new technologies) for the best deal, prices and comprehensive cover. » According to Fitch, the Brazilian insurance market remains the largest in the Latin American region, with total written premiums reaching 94bn Reais (US$55.8bn) in January-September, excluding health insurance.8 © 2010 Fair Isaac Corporation.
  • 9. Brazilian Insurance Outlook – A look at 20109 © 2010 Fair Isaac Corporation.
  • 10. Latin America - Non-Life Insurance Premiums Growth10 © 2010 Fair Isaac Corporation.
  • 11. Brazilian Non-Life Insurance – Market Projections11 © 2010 Fair Isaac Corporation.
  • 12. Brazil Life Insurance Market12 © 2010 Fair Isaac© 2010 Fair Isaac Corporation. Confidential. Corporation.
  • 13. Brazilian Life Insurance – Trends and Factors» The life insurance segment accounts for approximately 51% of premium revenues» Complementary healthcare is typically one of the first things that individuals buy when purchasing power increases.» The growth of the Brazilian middle class should continue to drive the complementary health market, as should the ―formalization‖ of the economy (companies that pay taxes generally provide better benefits to employees, including complementary health care).» To stimulate competition and reduce prices for personal lines insurance, the Brazilian government removed the previously existing prohibition against life insurers selling home and personal casualty insurance. The regulatory change is the first step in the implementation of the "Minha Casa, Minha Vida" (My House, My Life) program created by Article 79 of Law No. 11.977.. Source: Goldman Sachs, Brazil: Insurance: Multi-Line, March 201013 © 2010 Fair Isaac Corporation.
  • 14. Life Insurance in Brazil – Trends and Factors Life insurance has been the fastest growing segment of the insurance industry R$ million, share of the industry as of 2009 Source: Goldman Sachs, Brazil: Insurance: Multi-Line, March 201014 © 2010 Fair Isaac Corporation.
  • 15. Brazilian Life Insurance – A look at 201015 © 2010 Fair Isaac Corporation.
  • 16. Latin America Life Insurance Premiums Growth16 © 2010 Fair Isaac Corporation.
  • 17. Brazilian Life Insurance – Market ProjectionsPROJEÇÃO MERCADO - PESSOAS AGRUPAMENTO PESSOAS Prêmio de Contribuição Período Cresc. Mix Sinistralidade Comissionamento Seguros Marginal 2007 10.602.434 15% 42% 25% 34% REALIZADO 2008 12.081.881 14% 15% 38% 24% 37% 2009 13.706.425 13% 15% 36% 23% 40% 2010 15.349.796 12% 15% 35% 25% 39% ESTIMADO 2011 16.973.473 11% 15% 35% 25% 40% 2012 18.595.036 10% 15% 35% 25% 40% 2013 20.247.567 9% 14% 35% 25% 40%As informações estimadas de Prêmios de Seguros foram realizadas de acordo com o PIB , para as estimativasde Sinistros e Comissionamento é realizada de acordo com os valores históricos e as tendências do mercado.17 © 2010 Fair Isaac Corporation.
  • 18. Important Issues & Threats Facing Insurers: » Increasing costs of regulation; » Internal Controls; » Solvency II – New (more) capital requirements; » New international accounting standards – IFRS; » New risks (cyber risks, climate change; longevity; media; others); » Long-Term Reduction in Investment Earnings  Lower interest rates ahead;  Implication: Industry must be prepared to operate in environment with investment earnings accounting for a smaller fraction of profits; +  Need to Improve overall Operational Efficiency18 © 2010 Fair Isaac Corporation.
  • 19. Analyst Perspective Effective implementation of predictive modeling to enhance risk selection and pricing — lead to greater profitability and growth in market share: » More-granular insight into customers » Greater operational performance » Better claims performance » Reduced losses, leakage and underwriting risks Source: Gartner Research: Top 10 Technologies With the Greatest Impact for the Property and Casualty Insurance Industry, 2010, Kimberly Harris-Ferrante19 © 2010 Fair Isaac Corporation.
  • 20. THANK YOU! – SAMY HAZAN samy@maritima.com.br Twitter: samyseg20 © 2010 Fair Isaac Corporation.