Trends shaping the Life Insurance industry in Brazil

1. Summary in english
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trends and
challenges
CADERNOS DE SEGURO
Reflections on the Life and
Private Pensions markets
in 2011 and 2012
SaMY HaZan
M aking predictions about
the future of a market
is always a difficult and
risky task. I do not intend to do any
exercise in futurology, but I shall
The Brazilian market for life
insurance has drawn much atten-
tion from foreign investors and in-
surers in general. Brazil is finally
ready to celebrate its entry into the
cades, dropped to the current 1.4%.
With the declining trend in fertil-
ity, Brazil will achieve the maxi-
mum of 264 million inhabitants in
2062, and thereafter the population
tentatively reflect upon the key driv- group of the most developed and will decline, according to IBGE. It
ers that will shape the insurance in- influential countries. is noteworthy that the current de-
dustry in Brazil in the coming years. New foreign companies will mographic situation in many de-
Let’s proceed to the key trends: enter the Brazilian market in the veloped countries is that of popula-
coming years, as a strategy to es- tion decline, a factor that limits the
tHe lOcus Of grOwtH and cape from economic stagnation in growth of the insurance market.
Optimism in tHe market Has their countries of origin. The increase in life expectan-
permanently cHanged fOr cy has increased the percentage of
tHe emerging ecOnOmies tHe new demOgrapHy Of BraZil adults and the elderly in our popu-
The data for our economy con- Brazil is going through a tran- lation. These demographic changes
tinue to point to a strong growth in sition now, which the vast majority have altered the mix of insurance
the coming years, creating an ex- of rich countries experienced in the products in Brazil, which reflects
tremely optimistic scenario for the past, the result of changes that be- the concerns of a generation with
insurance market. The investment gan six decades ago. In the 50s, the the problem of living for much
rate is growing and the credit is at Brazilian population had high rates longer: the highest proportion of
record levels. The unemployment of growth, due to the combination insurance premiums for the seg-
rate is the lowest in the IBGE series of a high birth rate and reduction ment is going to retirement and
(6% in late 2010), establishing condi- of infant mortality. The population benefit products in life, such as
tions for the corporate benefits mar- grew at an average of 3% per year, VGBL, insurance for disability and
ket and for insurance in general. rate which, in the following de- serious illness (which pays a benefit

2. in life after the diagnosis of a seri- strOnger regulatiOn analysis and acceptance Of
ous covered illness). In the main economies of risk - underwriting
the world, regulators plan intense A new system will emerge,
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attracting new markets changes in regulation and super- which should take away from in-
and tHe new prOfile Of tHe vision of insurers in general. The surance brokers the responsibility
CADERNOS DE SEGURO
BraZilian cOnsumers focus will be on making the risks and burden of the personal state-
The middle class played a lead- taken by these companies more ment of health and risk (DPS) .
ing role in the economy in recent transparent. In other words, this This process will be done by a sys-
years. Millions of Brazilians have identification applies not only to tem of ‘tele-underwriting’ or risk
taken advantage of the good mo- risk underwriting, but also opera- acceptance by telephone. While
ment in the economy to experience, tional risk, credit and insurance the client is interviewed by phone,
for the first time, the consumption of market. There is no doubt that the their responses are transmitted
many goods and services, increasing insurance industry will be subject digitally to the broadcasting sector
the demand of products for protec- to more stringent oversight, as it of the insurer, which stores data or
tion, such as funeral, credit life in- has occurred in recent years. makes a transfer to an automated
surance, loss of income (unemploy- Another challenge is the “Sol- underwriting environment. In cas-
ment), life and personal accident. vency II”, an initiative of regula- es of no history of health, it might
The newest market that should arise, tion that should change the way in- mean instant approval and a policy
as the result of creating a mass mar- surers will manage their business- issued much more promptly.
ket in Brazil, is that of popular insur- es. However, it is also likely that
ance and microinsurance products. higher capital requirements will be multicHannel service centers
Another segment that should required, similar to what is occur- The Internet and digital devic-
attract the attention of many in- ring not only in Brazil but also in es (cell phones, iPads) are changing
surers is the market geared to- other countries since 2006. the way people live, relate, behave
wards women, whose presence in and, nowadays, they are literally,
the labor market and as head of prOducts largely responsible for a change in
household is increasing. With the opening of the reinsur- behavior.
ance market, the major insurers will Insurers will face the chal-
cOnsOlidatiOn, mergers launch new products to meet those lenge of increasing their power of
and acquisitiOns Of market risks that have not been met so far. reaction and response, supported
players Individual Life Insurance cov- by these various channels. Such an
Another important challenge erage for life (lifetime) solve the environment will require the com-
that large insurance companies will problem, or risk, of discontinuity pany to implement processes that
face is specialization and focus on of coverage when protection is most are mutually supportive and at the
core activities (core business). The needed, therefore it should appear same time, be agile enough to re-
paradigm of growing in order to as a trend for the coming years. spond to ongoing changes.
obtain better cost efficiency and im- With regard to corporate in-
proved operational efficiency has surance such as “Group Life”, the SaMY HaZan
Superintendent of Planning and Life
never been so important, but this big news and market trend are not at the marítima Seguros. Graduated in
new thinking will also require great- related to the product itself, but to Business Administration at Fundação
Getúlio Vargas (FGV-SP), specializes
er specialization from companies. the inherent processes of the busi- in marketing and Distribution at the
According to several analysts, ness. Several insurers must provide université Catholique de Louvain. He is
a professor of mBA in insurance at the
we can expect, in the next few or improve their billing systems FGV-SP and at the Foundation institute
years, more outsourcing of non- and insured movements via In- of Administration, university of São
Paulo (FiA-uSP)
core activities, and a movement to- ternet, creating more convenience samy@maritima.com.br
wards new strategic alliances. and safety in the process. www.twitter.com/samyseg