What is the insurance market like in Brazil?
The insurance industry has been gradually changing in recent years. The business, which was once stable and predictable, is no longer like that. Climate change has impacted risk profiles, distribution needs have become omnichannel and the focus is no longer so much on the product, but especially on the customer.
Throughout this time, the growing adoption of technology has increasingly fueled market growth and a new ecosystem of Players (Insurtechs) threatens to undermine traditional companies in the sector.
While there is room in most segments for several participants, not all competitive levers are fully or equally available to everyone.
In 2020, the social isolation caused by the COVID-19 pandemic triggered a global economic slowdown that was noticeable in the insurance market: premium growth slowed down and profits fell.
Still, the market size is expected to reach, according to recent Accenture estimates, a global value of $7.5 trillion by 2025.
In fact, the Insurance Industry is going through a phase of great internal change, evolution and, in a certain way, a true revolution.
The growing middle class population in developing economies, such as Brazil, is driving this demand. Let's see, in practice, how National scene has taken a stand at the moment.
Main trends in national insurance
The insurance activity in Brazil produces a turnover corresponding to approximately 6.4% of national GDP, considering the participation of Supplementary Health, or 3.5%, without the movement of these operators.
“The insurance segment is the leader in transactions in Latin America, with almost 44% of regional sales (or US$ 57.6 billion, according to 2020 data), and 18th in the world ranking.”
National Confederation of General Insurance, Private Pension and Life, Supplementary Health and Capitalization Companies (CNSeg)
The Brazilian insurance market quickly adapted to working and providing services remotely, without interrupting the business and activities of the sector. On the contrary, the proposals continued to be examined, the insured serviced and the claims paid, demonstrating the ability to use technology to ensure the continuity and reliability of the sector.
That said, the main trends in this market have been quite diversified, depending on the specific branch being evaluated. For example, there was a considerable reduction in the number of claims related to car insurance as a result of the quarantine and the “pay-per-use” model gained evidence.
On the other hand, cyber risk insurance, little talked about, began to provide enormous growth potential, both due to the intensification of the digitalization of processes in the post-pandemic period and the new General Data Protection Law (LGPD). Currently, this market is composed as follows:
If this industry ended up taking longer to embrace the digital revolution than other sectors, now all those impediments seem to have been absorbed and the sector has fully embraced digital transformation.
With that in mind, it is crucial to be aware of New trends that are emerging for companies that provide insurance products and services. After all, those who are able to seize these opportunities before the competition will guarantee a fundamental competitive advantage.
- The Insurtech Revolution
The term Insurtech derives from the combination of Insurance and Technology. The insurtech revolution was initially born from innovative startups, which were able to take advantage of the opening of the market and implement new digital technologies in a much more agile way than large companies.
Now, however, the picture has changed. Industry giants have learned from these initiatives and, in many cases, have sought solid and beneficial acquisitions or partnerships. For this reason, for the entire sector, placing technology as a central pillar is becoming an increasingly strong impetus.
- Search for greater customer retention
According to Callminer, the Insurance Industry has the third highest planned churn rate. If in 2018 this rate was 19.5%, now we are at approximately 22.5%.
And according to studies by Bain & Co., it costs 6 to 7 times more to acquire a new customer than to retain one through a satisfying experience.
Thus, the real challenge for the future lies in the capacity of companies in the sector to retain their insured, building a path of transparency, engagement and loyalty, abandoning old coercive practices that were historically counterproductive.
- Data-driven service
Without a doubt, the most effective way to create a relationship with your users is to establish a tailor-made dialogue based on individual risk profiles, but also on their characteristics, needs and desires.
Thanks to the possibility of collecting, analyzing, and interpreting data, companies can have a very accurate picture of their audience, initiating a truly one-to-one dialogue.
A sector in constant expansion
Over 70% of the Latin American population now has access to a smartphone that connects them to the Internet and allows them to collect accurate, real-time data about incidents that can help insurance companies make claims faster.
In Brazil, in 2021, 81% of the population accessed the internet, according to the Regional Center for Studies for the Development of the Information Society.
Overall, the current scenario represents a major challenge for the Brazilian insurance market, but it also presents many new business opportunities. The figures presented last year highlight this reality:
- 49 million health care recipients (source: ANS);
- of 29 million beneficiaries of exclusively dental plans (source: ANS);
- of 11 million insured homes (source: FENSEG);
- 19.7 million insured vehicles (source: FENSEG);
- 14 million hectares are protected by rural insurance (source: MAPA);
- 18 million collective and individual pension plans (source: SUSEP);
- 3.5 billion active savings bonds (source: FENACAP).
Therefore, if the post-pandemic world is giving rise to the reinvention of products, innovation and risk mitigation to which we are exposed, the fact is that, more than ever, the insurance sector's need to produce solutions to protect its users with the support and support of technology on this journey remains latent.
A partnership between Clicksign and Porto Seguro shows, in practice, how it is possible to do business in an increasingly agile, profitable way and aligned with digital transformation trends.
That said, if you want to digitize your processes, as the main companies in the market do, in an applicable and legally valid manner, don't waste time and discover our Plans and Pricing.
