Brazil’s economic retraction in the first quarter of 2012 has not put the brakes on its insurance market, which is expected to continue growing by double digits over the next three years.As Brazilian companies strive to compete globally, their need for insurance will increase. As Brazilian IPOs increase—in recent years about 140 companies launched IPOs at BOVESPA—shareholders will demand very clear corporate governance and risk management policies.
Furthermore, the rapid growth of the country’s middle class and subsequent increase in purchasing power, has also contributed to the demand for insurance as people are increasingly seeking ways to safeguard their newfound assets. In the past 7 years more than 40 million people ascended to the middle class, represented a high 64.3%. Today the Brazilian middle class represents 54% of the population.
Infrastructure BoomMega infrastructural projects are also fueling the growth of insurance in Brazil which is hosting the upcoming Football World Cup and the 2016 Olympics. This construction boom is also being encouraged by the government’s accelerated growth program, PAC. All this is attracting global investors and insurance companies.
Brazil has a low incidence of natural disasters, like earthquakes, tsunamis and hurricanes, which makes it an even more attractive proposition for international investors and in particular insurers and reinsurers which are piling into the market, creating an intensely competitive market.
This environment usually results in a trend of market consolidation through mergers and acquisitions.
Guest blogger José Otávio Sampaio is CEO of Willis Brazil Retail. He has more than 20 years in the insurance industry, focusing on risk management, global insurance programs and executive leadership.