Business and Investment Opportunity in the Brazilian Health Insurance Industry Analyses and Forecas by BRICdata

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									                           Business and Investment
                           Opportunity in the Brazilian
                           Health Insurance Industry:
                           Analyses and Forecasts to 2016
                           Industry Forecast Report

                           Reference code: IS0103MR
                           Published: February 2012
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EXECUTIVE SUMMARY



1 Executive Summary
Market size and growth potential
   The Brazilian health insurance category increased from BRL9.8 billion in 2007 to BRL15.1 billion in 2011, recording a
    CAGR of 11.27% over the review period. Over the same new period, the number of new policies sold in the Brazilian
    health insurance category increased from 69.14 million to 88.42 million. Overall, the category is expected to record a
    CAGR of 6.32% over the forecast period to reach a projected value of BRL16.2 billion in 2016. Over the same period,
    the number of new policies sold in the Brazilian health insurance category is expected to increase from 95.66 million in
    2012 to 116.34 million in 2016.

Trends and drivers
   During the review period, the penetration of Brazilian health insurance products increased from 0.34% in 2007 to
    0.54% in 2011, as many new policies were sold across the country. This figure is expected to reach 0.60% by 2016.
    Penetration levels have increased due to higher literacy rates and growing consumer awareness among Brazilian
    consumers of the need for, and benefits of, health insurance.
   Over the forecast period, increased consolidation is expected in the Brazilian health insurance category due to
    growing competition. Consequently, large companies are acquiring smaller companies to increase their market share.
    As a result of capital constraints and rising competition from larger companies, small health insurance companies are
    under pressure.

Challenges
   In Brazil, health insurance companies are facing the challenge of financing insurance claims due to the increasing cost
    of healthcare services. This increase in the cost of healthcare services has been fuelled by rising medical inflation and
    a growth in the cost of medical equipment and technology. Moreover, due to this increasing cost of healthcare
    services, the revenue generated in terms of premium received from policy holders might not be sufficient to meet the
    claim liabilities. Key challenges for the Brazilian health insurance category include cover for diseases and the limited
    availability of hospitals. Specifically, various diseases are not covered in many health insurance policies, which limit
    their attractiveness. Furthermore, some health insurance plans cover a limited number of hospitals and physicians and
    consumers are only allowed to claim when receiving medical treatment from these service providers.

Competitive landscape
   The Brazilian health insurance category is currently dominated by domestic companies. The category is concentrated,
    with the leading eight companies accounting for a 69% share of the total retained premium in 2011. In the same year,
    the health insurance companies controlled by banks, such as Bradesco Seguros S.A. and Itau Seguros S/A,
    collectively held a 24.6% market share.
   Porto Seguro S.A., a private health insurance company, is the market leader in the Brazilian health insurance
    category, with a market share of 13.3%. Other leading independent personal accident and health insurance providers
    include Amil Assistência Médica Internacional Ltda., which accounted for a 12.4% market share in 2011; and Sul
    America SA, which accounted for a 9.4% market share in the same year.

Distribution dynamics
   The written premium from new businesses generated through agencies recorded a CAGR of 17.30% during the
    review period, while the written premium generated through direct marketing recorded a review-period CAGR of
    11.35% and the written premium generated through bancassurance recorded a review-period CAGR of 14.74%. The
    direct marketing channel registered sales of BRL12.9 billion in 2011, the agencies channel registered sales of BRL1.8
    billion and the bancassurance channel recorded sales of BRL2.4 billion. In terms of number of policies sold in 2011,
    the direct marketing channel recorded 63.34 million new policies, while, in the same year, the agencies channel
    registered 8.51 million and the bancassurance channel registered 11.40 million.
   Health insurance companies in Brazil are making efforts to increase the penetration of existing distribution channels
    across the country. However, all channels are expected to record lower growth in terms of written premium during the
    forecast period than the review period. This will reflect insurance companies’ efforts to more tightly control the costs
    associated with the distribution of health insurance policies in Brazil.




Health Insurance in Brazil: Key Trends and Opportunities, Analyses and Forecasts to 2016                              Page 2

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



TABLE OF CONTENTS
1         Executive Summary ......................................................................................................................... 2
2         Brazilian Health Insurance Category Attractiveness ...................................................................... 7
2.1       The Healthcare Industry in Brazil ........................................................................................................ 8
2.2       Market Size and Growth Potential..................................................................................................... 11
2.3       Health Insurance Category – Benchmarking with BRIC Countries ..................................................... 15
3         Brazil Health Insurance Market Trends and Drivers ..................................................................... 16
3.1       Macroeconomic Fundamentals ......................................................................................................... 16
3.1.1     Brazil – GDP at constant prices ........................................................................................................ 16
3.1.2     Brazil – number of households ......................................................................................................... 17
3.1.3     Brazil – inflation ................................................................................................................................ 18
3.1.4     Brazil – urban and rural population ................................................................................................... 19
3.1.5     Brazil – annual disposable income.................................................................................................... 20
3.1.6     Brazil – unemployment rate .............................................................................................................. 21
3.2       Business Trends and Drivers ............................................................................................................ 22
3.3       Consumer Drivers ............................................................................................................................ 24
3.4       Regulatory Framework ..................................................................................................................... 26
4         Competitive Landscape and Key Market Indicators ..................................................................... 27
4.1       Competitive Landscape .................................................................................................................... 28
4.2       Key Market Indicators....................................................................................................................... 30
4.2.1     Incurred loss .................................................................................................................................... 30
4.2.2     Loss ratio ......................................................................................................................................... 31
4.2.3     Investment type ................................................................................................................................ 32
4.2.4     Premium per capita .......................................................................................................................... 33
4.2.5     Paid claims....................................................................................................................................... 34
5         Product Strategy and Customer Segmentation ............................................................................ 35
5.1       Introduction ...................................................................................................................................... 35
5.2       Customer Targeting Strategy ............................................................................................................ 36
5.3       Current and Future Product Strategy ................................................................................................ 37
6         Distribution Channels .................................................................................................................... 38
6.1       Distribution Channel Market Dynamics ............................................................................................. 38
6.2       Distribution Channel Forecasts ......................................................................................................... 39
7         Challenges ...................................................................................................................................... 41
8         Company Profiles ........................................................................................................................... 42
8.1       Porto Seguro S.A. – Company Overview .......................................................................................... 42
8.1.1     Porto Seguro S.A. – key facts........................................................................................................... 42
8.1.2     Porto Seguro S.A. – main products and services .............................................................................. 43
8.1.3     Porto Seguro S.A. – key employees ................................................................................................. 43
8.2       Amil Assistência Médica Internacional Ltda. – Company Overview ................................................... 44
8.2.1     Amil Assistência Médica Internacional Ltda. – key facts .................................................................... 44
8.2.2     Amil Assistência Médica Internacional Ltda. – main products and services ....................................... 44
8.2.3     Amil Assistência Médica Internacional Ltda. – key employees .......................................................... 44
8.3       Bradesco Seguros S.A. – Company Overview .................................................................................. 45


Health Insurance in Brazil: Key Trends and Opportunities, Analyses and Forecasts to 2016                                                                Page 3

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



8.3.1     Bradesco Seguros S.A. – key facts................................................................................................... 45
8.3.2     Bradesco Seguros S.A. – main products and services ...................................................................... 45
8.3.3     Bradesco Seguros S.A. – key employees ......................................................................................... 45
8.4       Sul America SA – Company Overview .............................................................................................. 46
8.4.1     Sul America SA – key facts .............................................................................................................. 46
8.4.2     Sul America SA – main products and services .................................................................................. 47
8.4.3     Sul America SA – Key employees .................................................................................................... 47
8.5       Unimed Paulistana – Company Overview ......................................................................................... 48
8.5.1     Unimed Paulistana – key facts.......................................................................................................... 48
8.5.2     Unimed Paulistana – main products and services ............................................................................. 48
8.5.3     Unimed Paulistana – key employees ................................................................................................ 48
9         Appendix ........................................................................................................................................ 49
9.1       About BRICdata ............................................................................................................................... 49
9.2       Methodology .................................................................................................................................... 50
9.3       Definitions ........................................................................................................................................ 52
9.4       Disclaimer ........................................................................................................................................ 53




Health Insurance in Brazil: Key Trends and Opportunities, Analyses and Forecasts to 2016                                                                Page 4

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