Even a superficial glimpse at the Brazilian insurance market will expose the incredible development of the sector – the volumes are increasingly growing at unbelievable rates. The insurance market grew 17% in 2007, 18% in 2008 and despite the world crisis the expected growth in 2009 is 15%.
The volume of Life Insurance premium is today more than 10 times the volume in 2000. Based on the numbers of Swiss Re I draw a comparison graph between the premium volumes of Brazil (in red and the US (in blue). The index of both is 100 for 1999.
The US volume for 2008 is still 25 times the Brazilian but is even so there is something impressive on the Brazilian market development. The main reason is, of course, the growth of the whole Brazilian economy and the improvement of the purchasing power of the poor.
But there is another reason for this development: bancassurance.
Bancassurance in Brazil succeeded to bring insurance to places and people that never saw a broker in their lives. The atmosphere was favorable: there was no regulations limitation to cross ownership between banks and insurance companies and the banks possess a great number of low income customers and proved to be excellent channels for insurance.
Recently the Brazilian Magazine EXAME published an interesting reportage about the competitive bancassurance market in Brazil. There was a lot of interesting numbers in the article - some of them left me really astonished:
- Insurance is the responsible for 34 % of the invoicing volumes of Bradesco (one of the largest private banks in Brazil)
- According to the American Bank Insurance Market Research Group (BIMRG), 80% of the profit of the Brazilian banks came from their insurance companies
- The share of bancassurance in the market share is 55 % (lower than Italy, Spain and France but greater than any other American country – Columbia is 15% and the US is 2 %)
- The administration cost for bancassurance is 16% of the premium and 19 % for the others
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