Brazil Insurance Industry
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Main Insurance Types In Brazil
In contrast to insurance companies in the markets like U.S. and European most firms operating in Brazil are multi-line firms offering health, life, property & casualty coverages. Especially those insurance firms associated with commercial banks, which profit from their branch networks and readymade customer base. Some 72% of the premiums written in Brazil are for auto, life, and health insurance.
The following table gives a clear picture of the main types of insurance in Brazil:
| Automobiles | 27% |
| Life | 24% |
| Health | 21% |
| Fire | 7% |
| Personal Accidents | 3% |
| Residential | 3% |
| Property | 3% |
| Risks | 2% |
| Others | 10% |
Source: Fenaseg
Auto Insurance In Brazil
Brazil’s auto insurance sector has grown in recent years very fast. The net written premiums in 2001 estimated to have totaled R$7.9bn.For the year 2002 it is estimated to have totaled US$2.8 billion. This growth resulted from a general increase in car ownership, an improvement in the awareness of insurance as a whole, more competitive pricing by insurers, and legal changes within Brazil.
The majority of auto coverage provided in Brazil is for collision, theft and fire risks. Liability insurance is beginning to feature significantly in the market.
| Year | 2000 | 2001 | 2002 |
| Net written Premiums- Automobiles | US $ 2.4Billion | US $ 2.5Billion | US $ 2.8 Billion |
Source: FENASEG
A compulsory auto injury insurance system operates in the country (known as DPVAT, for Personal Damage caused by terrestrial vehicles – or in Portuguese, “Danos Pessoais Causados por Veículos Automotores de Vias Terrestres”. This insurance is run by the Federation of National Private Insurance and Capitalization Firms (FENASEG), and provides insurance coverage (regardless of who is at fault) of about $2,000 for injury to third parties. The premiums for this insurance are paid when the car owner pays his/her annual road tax.
Auto insurance products usually include 24-hour assistance, replacement in case of accident, accredited garages and loyalty discounts. Some insurers are now covering imported vehicles and corporate fleets.
The potential for growth in the Brazilian auto insurance sector is very significant, mainly because of an increasing level of car ownership in the country and of security issues in some of the major Brazilian cities.
Life Insurance in Brazil
Life insurance in Brazil represented 0.7% of the GDP in 2002, compared to 1.5% in the U.S. Despite this ranking, life and retirement insurance products are becoming more sophisticated as the Brazilian government tries to encourage private retirement plans. These categories have been the fastest growing areas for insurers. Group term insurances are mainly sold through group life policies to cover employees of private companies.
According to the Brazilian Superintendency of Private Insurance (SUSEP), Brazil’s life insurance sector net written premiums in 2002 are estimated to have totaled US$2.4 billion, up 67% from 2001.
| Year | 2000 | 2001 | 2002 |
| Net Written Premiums-life | US $1.0 Billion | US $ 1.45 Billion | US $ 2.4Billion |
Source: FENASEG/SUSEP
Life insurance represents a relatively small proportion of total insurance activity in Brazil (24%) compared to countries such as the USA (30%) and Japan (40%). This segment has attracted several foreign insurers, such as the U.S firms Prudential, Metropolitan Life, AIG, Aetna, Liberty Mutual, among others. The top ten players in the sector are responsible for 58% of total life insurance sales. Distribution of life insurance is still to be done through brokers, although the sale of this type of insurance through banks is increasing very fast.
Health Insurance In Brazil
Brazil has relatively a small medical insurance market. From a survey it is found out that Seventy-four percent of the population receive health care through the Government-owned public health system. Only 3% of the population are enrolled in private insured plans. The remainder is associated to self-insured, medical groups, cooperatives or Health Maintenance Organizations (HMOs).
Brazil’s national health plan – Sistema Único de Saúde (SUS), or Unified Health Care System – contracts with public and private providers for free health care. Payments are low, thus services are often of lower quality with long waiting periods. SUS is funded by the National Social Security Institute – Instituto Nacional de Seguridade Social (INSS), to which all employees contribute through payroll deductions. With an annual budget of US$ 10 billion, SUS funds Brazilian states’ Secretariats of Health, which in turn provide funds to the municipalities to operate clinics.
| Year | 2000 | 2001 | 2002 |
| Net Written Premiums-Health | US $ 1.8Billion | US $ 2.0Billion | US $ 2.1 Billion |
| Year | 2000 | 2001 |
| Net written Premiums-Reinsurance | US $ 485Million | US $680Million |
Source: IRB
