There are many reasons why insurers and reinsurers get excited about Brazil.
The relaxation of certain regulatory restrictions, coupled with sustained economic growth, has resulted in a significant influx of capacity into Brazil from both domestic carriers and international firms looking to expand their footprint in a country, which in 2012, ranked 7th largest in the world for GDP.
All of the world’s major insurance and reinsurance groups are increasing their investment in Brazil, resulting in an ever more competitive market where brokers are able to secure increasingly favourable terms and conditions for their clients.
It is also a growing market. While Brazil’s economy has slowed recently, it is still growing, driven by huge infrastructure projects and a significant shift in the social make-up of the population. More people are joining the middle class. They possess more assets and equity that they want to protect, in turn driving demand for insurance products.
So What’s Driving This Growth?
Brazil has many things going for it: rich reserves of natural resources and a highly educated and skilled workforce. Brazil’s products are in demand, and its people are extremely innovative: for example, Brazil practically spearheaded the world wide use of internet banking on a consumer basis.
Importantly, in comparison to its BRIC counterparts, Brazil’s insurance market is the most open to West. This makes it the most attractive for investment, which allows the country to develop and grow at a faster rate.
The gradual transition from a state controlled economy and insurance market to a more westernised model—which admittedly still has its idiosyncrasies with the latest resolution re-imposing mandatory local reinsurance shares—has been managed in a gradual way, allowing companies to adequately prepare for each stage of deregulation, creating stability
This bodes well for the future; as long as the country remains on its present trajectory, Brazil can look forward to many more years of sustainable growth. This will in turn provide insurers and reinsurers with many more opportunities for years to come.
Greg Curtis is Executive Director at Faber Global. He is responsible for coordinating and assisting his retail and reinsurance colleagues in the Latin America region in the following occupancies: power generation, mining, metals, telecommunications, retail, leisure, ports and transport infrastructure.