Life Insurance in Brazil, Key Trends and Opportunities to 2016: Post Retirement Products to Record Double Digit Growth

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					Life Insurance in Brazil, Key
Trends and Opportunities to
2016: Post Retirement Products
to Record Double Digit Growth
Market Intelligence Report

Reference code: IS0009MR

Published: January 2012

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 EXECUTIVE SUMMARY




1 Executive Summary

        Brazil is the world‟s seventeenth-largest insurance market and the largest in the Latin American region.
        The insurance industry in the country has expanded significantly over the last decade, driven by strong
        macroeconomic and microeconomic fundamentals, raising consumer awareness of insurance products,
        partial relaxation of regulatory restrictions, and liberalization of the industry to allow foreign competition.
        However, despite this industry expansion, Brazil remains a largely untapped market with 70% of the
        employed population being uninsured. Low insurance penetration, with total life, pension and property
        and accident insurance premiums representing 3% of the country‟s GDP, is an opportunity for insurance
        companies to explore.

        Life insurance market to report significant growth driven by growth in pension products

        The size of Brazil‟s life insurance market is expected to increase from BRL61.3 billion (US$36.8 billion) in
        2011 to BRL109.9 billion (US$65.8 billion) in 2016, at a CAGR of 12.4%. The growth of the life insurance
        market will be driven by the significant increase in sales of deferred annuity products for individuals, also
        known as Vida Gerador de Benefícios Livres (VGBL). Over the review period these products generated
        US$23.32 billion in premium income, growing at a CAGR of 12.4%, and held a 77.2% share of the overall
        life insurance market. The premium income from VGBL products doubled during 2004–2009, and growth
        is expected to continue over the forecast period.

        Bancassurance will remain as the dominant distribution channel

        The life insurance market is dominated by private banks which own and control the leading insurance
        companies. In 2011, bancassurance was the largest distribution channel for life insurance and pension
        products, with growth in this channel driven by the competitive advantage held by banks over other
        competitors, as their strong network of brokers and client relationships allowed them to offer products
        across all markets. In the forecast period, bancassurance is expected to remain the dominant distribution
        channel as more of the population gains access to formal banking channels.

        Regulatory environment will tighten over the forecast period

        The regulatory environment is expected to become more restrictive following new proposals by the
        Superintendência de Seguros Privados (SUSEP), the Superintendence of Private Insurance. In its efforts
        to implement a risk-based supervisory regime in line with international standards and practices, SUSEP
        has announced stricter regulations for risk management covering the insurance, open private pension
        funds and capitalization markets. It has announced plans to tighten the solvency rules for life insurance
        companies, and plans to increase the minimum retained capital for these companies which are currently
        very low. According to SUSEP, although most companies meet the minimum regulatory capital
        requirement, they are not well capitalized. The proposed solvency regulations will increase insurance
        companies‟ capital requirements but will allow them to assume higher risks and improve their financial
        stability.

        IRB to lose market share as competition from foreign reinsurers increases

        As Brazil‟s overall insurance industry consolidates over the forecast period, insurance companies will
        diversify into new lines of business and develop innovative products which will require the expertise and
        financial strength of foreign reinsurance companies. IRB and other domestic reinsurers will lose market
        share to foreign reinsurance companies which offer innovative and relatively inexpensive products. While
        as of 2011, the reinsurance market is primarily concentrated on the property segment, more business is

Life Insurance in Brazil, Key Trends and Opportunities to 2016: Post Retirement Products to
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© Timetric. This product is licensed and is not to be photocopied                                       Published: January 2012
 EXECUTIVE SUMMARY



        expected to be generated in segments such as credit, surety and agriculture over the forecast period,
        driven by high GDP growth and new infrastructure projects.

        Industry heading towards further consolidation with competition from foreign companies

        As a result of SUSEP‟s continued measures to deregulate the insurance market, smaller independent
        insurance companies in Brazil appear to be at a disadvantage, mainly due to capital constraints and
        rising competition. In order to enhance their competitiveness, many small insurers looked to enter into
        partnership with foreign companies to gain quick access to capital for expansion and to explore
        reinsurance opportunities outside the country. The industry is expected to consolidate further with larger
        companies acquiring smaller ones to strengthen their market shares.




Life Insurance in Brazil, Key Trends and Opportunities to 2016: Post Retirement Products to
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© Timetric. This product is licensed and is not to be photocopied                                  Published: January 2012
 TABLE OF CONTENTS



TABLE OF CONTENTS

1      Executive Summary .............................................................................................................. 2
2      Introduction ......................................................................................................................... 15
    2.1 What is this Report About? ..............................................................................................................15
    2.2 Definitions .......................................................................................................................................15
    2.3 Methodology ...................................................................................................................................17
3      Brazilian Insurance Industry Attractiveness ..................................................................... 19
    3.1 Insurance Industry Market Size, 2007–2016 ...................................................................................20
    3.2 Key Industry Trends and Drivers .....................................................................................................24
        3.2.1     Business drivers ....................................................................................................................................... 24
        3.2.2     Consumer drivers ..................................................................................................................................... 25
    3.3 Recent Market Developments .........................................................................................................26
4      Life Insurance Market Outlook ........................................................................................... 27
    4.1 Life Insurance Growth Prospects by Category ................................................................................28
        4.1.1     Individual life insurance category market size, 2007–2016 ...................................................................... 53
        4.1.2     Individual pension category market size, 2007–2016 .............................................................................. 57
        4.1.3     Individual others life insurance products category market size, 2007–2016 ............................................ 61
        4.1.4     Group life insurance category market size, 2007–2016 ........................................................................... 65
        4.1.5     Group superannuation category market size, 2007–2016 ....................................................................... 69
    4.2 Life Insurance Growth Prospects by Customer Segments...............................................................73
        4.2.1     Individual segment market size, 2007–2016 ............................................................................................ 73
        4.2.2     Individual single premium category market size, 2007–2016................................................................... 73
        4.2.3     Individual non-single premium category market size, 2007–2016 ........................................................... 77
        4.2.4     Group segment market size, 2007–2016 ................................................................................................. 81
        4.2.5     Group single premium category market size, 2007–2016 ........................................................................ 81
        4.2.6     Group non-single premium category market size, 2007–2016 ................................................................ 85
5      Analysis by Distribution Channel ...................................................................................... 89
    5.1 Direct marketing channel market size, 2007–2016 ..........................................................................91
    5.2 Bancassurance channel market size, 2007–2016 ...........................................................................99
    5.3 Brokers channel market size, 2007–2016 .....................................................................................107
    5.4 Other channel market size, 2007–2016 .........................................................................................115
6      Regulatory Policies ........................................................................................................... 123
7      Porter’s Five Forces Analysis – Brazilian Life Insurance Market .................................. 124
    7.1 Bargaining Power of Supplier: medium to High .............................................................................124
    7.2 Bargaining Power of Buyer: low to medium ...................................................................................124
    7.3 Barriers to Entry: low to medium ...................................................................................................125
    7.4 Intensity of Rivalry: high ................................................................................................................125
    7.5 Threat of Substitutes: low ..............................................................................................................125
8      Reinsurance Growth Dynamics and Challenges ............................................................ 126

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© Timetric. This product is licensed and is not to be photocopied                                                                              Published: January 2012
 TABLE OF CONTENTS



    8.1 Reinsurance market size, 2007–2016 ...........................................................................................127
    8.2 Reinsurance market size by type of insurance, 2007–2016 ...........................................................131
9      Competitive Landscape and Strategic Insights .............................................................. 136
    9.1 Overview .......................................................................................................................................136
    9.2 Leading Companies in the Brazilian Life Insurance Market ...........................................................136
    9.3 Bradesco Seguros S.A – Company Overview ...............................................................................138
       9.3.1      Bradesco Seguros S.A – key facts ......................................................................................................... 138
       9.3.2      Bradesco Seguros S.A – main products................................................................................................. 138
       9.3.3      Bradesco Seguros S.A – main competitors ............................................................................................ 138
       9.3.4      Bradesco Seguros S.A – key employees ............................................................................................... 139
    9.4 Itau Unibanco Holding SA – Company Overview...........................................................................140
       9.4.1      Itaú Unibanco Holding SA – key facts .................................................................................................... 140
       9.4.2      Itaú Unibanco Holding SA – main products ............................................................................................ 140
       9.4.3      Itaú Unibanco Holding SA – main competitors ....................................................................................... 140
       9.4.4      Itaú Unibanco Holding SA– key employees ........................................................................................... 141
    9.5 Banco do Brasil S.A. – Company Overview...................................................................................142
       9.5.1      Banco do Brasil S.A. – key facts ............................................................................................................ 142
       9.5.2      Banco do Brasil S.A. – main products and services ............................................................................... 142
       9.5.3      Banco do Brasil S.A. – main competitors ............................................................................................... 142
       9.5.4      Banco do Brasil S.A. – key employees ................................................................................................... 143
    9.6 Santander Seguros S.A – Company Overview ..............................................................................145
       9.6.1      Santander Seguros S.A – key facts ........................................................................................................ 145
       9.6.2      Santander Seguros S.A – main products ............................................................................................... 145
       9.6.3      Santander Seguros S.A – main competitors .......................................................................................... 145
       9.6.4      Santander Seguros S.A – key employees .............................................................................................. 146
    9.7 Caixa Geral de Depositos, SA – Company Overview ....................................................................147
       9.7.1      Caixa Geral de Depositos, SA – key facts.............................................................................................. 147
       9.7.2      Caixa Geral de Depositos, SA – main products ..................................................................................... 147
       9.7.3      Caixa Geral de Depositos, SA – main competitors ................................................................................ 147
       9.7.4      Caixa Geral de Depositos, SA – key employees .................................................................................... 148
    9.8 Mapfre SA – Company Overview ..................................................................................................149
       9.8.1      Mapfre SA – key facts..............................................................................................
				
DOCUMENT INFO
Description: Brazil is the world's seventeenth-largest insurance market, and the largest in the Latin American region. The insurance industry in the country has expanded significantly over the last decade, driven by strong macroeconomic and microeconomic fundamentals, raising consumer awareness of insurance products, partial relaxation of regulatory restrictions, and liberalization of the industry to allow foreign competition. However, despite this industry expansion, Brazil remains a largely untapped market with 70% of the employed population being uninsured. Low insurance penetration, with total life, pension and property and accident insurance premiums representing 3% of the country's GDP, is an opportunity for insurance companies to explore.
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