The insurance brokerage market - Brazil

1.2 A fast-growing global market

The global insurance market was valued at *** billion USD in ****, with an expected CAGR of *.*% until ****, to reach nearly *** billion USD [***].

Size of the global Insurance Brokerage market World, ****-*****, in billion USD Source: ****

The geographical region that is expected to experience the strongest growth in this period is Asia-Pacific, with a CAGR of *.*% [***].

Insurance is an activity present in all countries of the world, which in **** generated contributions of more than * trillion dollars for life and non-life insurance. The United States has the highest premiums in both life and non-life insurance, with a payout of nearly US $**** billion.

[***] Total global premiums World, ****, in billion US$ Source: ****

[***] Premium of life and non-life insurance World, **** - ****, billion US$ Source : FFA  The increase is more pronounced for non-life insurance contributions, which will grow at an average annual rate of *.*% between **** and ****, while the average annual growth rate for life insurance is only *.*%.

In Europe, life insurance generates more than US $*** billion in contributions, while non-life insurance generates only US $***.* billion. Contributions are highest in the United Kingdom, Germany and France.

[***] Country where the life and non-life insurance premiums are not the most important Europe, ****, billion US$ Source: ****

 The distribution ...

1.3 The Brazilian market

The insurance brokerage market is one that is very much dependant on the whole of the insurance industry. The insurance market in Brazil is quite siginificant for the economy, representing *.*% of the country's GDP.

In ****, the revenue from this industry was of *** billion Brazilian Reais, a value that has been following a strong growth for a number of decades [***].

Turnover of the insurance industry Brazil, ****-****, in billions of Brazilian Real Soure: Susep

As it can be seen from the graph above, the growth of the Brazilian insurance industry has been slowing down in recent years. Regardless of this, it is still expected to continue growing in the years to come.

While we do not have concrete values for the size of the insurance brokerage market in Brazil, we can definitely assume that it is in a strong and solid situation. A study conducted by Klooks in **** showed that this sector grew by *.*% in **** [***].

2.1 Understanding the demand drivers

The Brazilian insurance market is extremely diverse and is driven by a significant number of factors which can be synthesized below:

2.2 Evolution of the factors influencing the main insurances in Brazil

In this section, we will concentrate on the evolution of the demand factors influencing the main insurance categories in Brazil: automobile, health and property insurance, where insure brokers are actively present.

First of all, the evolution of the number of cars is an important determinant of the demand for car insurance. This figure has increased steadily from **** to ****, reaching the value of **.** million cars in ****.

Evolution of the number of cars Brazil, ****-****, in millions of cars Source: ****

Le nombre de décès dans des accidents de voiture peut également être un facteur alarmant qui incite la population à augmenter la demande d'assurances auto. Malgré l'augmentation de **,*% du nombre de décès dans les accidents de voiture entre **** et **** et la légère augmentation entre **** et ****, ce nombre est en baisse depuis ****. Ainsi, en ****, cette valeur était de **,* milliers de décès. 

Evolution of the number of deaths in car accidents Brazil, ****-****, in thousands of deaths Source: ****

 Concerning the demand for property insurance, it can be highly determined by the number of residential units sold in the country. In fact, people usually resort to a property insurance when buying a residential unit, mainly because it represents ...

2.3 A sector disrupted by technology

The term "InsurTech" is used to define companies, usually start-ups, which use technological innovations, such as artificial intelligence or blockchain, to improve the efficiency of the current insurance industry model and increase savings. The term comes from a combination of the words "insurance" and "technology" and was coined following the example of the term "FinTech". 

The importance of InsurTechs continues to grow in the European insurance market. The entire traditional value chain has been impacted by the emergence of this new type of player and the new business models that they have implemented. In most cases, their innovation comes from a new product offering or the creation of new concepts, such as a community of insureds, for example. Furthermore, many players have focused on creating insurance websites that operate and advise customers on an automated basis. Sometimes, however, their disruption comes from the technology they use to distribute the insurance product. As a matter of fact, InsurTech players are focusing on strategic channels that have been long ignored by traditional players.

Many InsurTechs behave as intermediaries, which acts as a proof of the dynamic nature of the sector. They include digital brokers that offer innovative distribution solutions in partnership with traditional ...

3.1 The insurance brokers in Brazil

As of ****, it is estimated that there are just under ***,*** insurance brokers around the country. These brokers are separated by legal form:

Private individuals Legal entities (***)

Most insurance brokers operating in Brazil are part of the first category - **.*% are private individuals and **.*% are legal entities [***].

Distribution of insurance brokers by legal form Brazil, ****, in % Source: ****

In regards to the branches in which these insurance brokers operate in, the most popular is personal insurance followed by supplementary insurance plans (***).

Number of insurance brokers by branches Brazil, ****, in thousands of brokers Source: ****

Geographically, most of these brokers are located in the South-East region of the country. In fact, Sao Paulo, Rio de Janeiro and Minas Gerais concentrate nearly two thirds of all the country's insurance brokers [***]. We can see in the map below where the insurance brokers are located around Brazil.

Geographical distribution of insurance brokers

Brazil, ****, in number of brokers

Source: ****

3.2 The key players

As seen in section *.* of this study, there are plenty of insurance brokers in Brazil. These brokers can either be private individuals or legal entities. In regards to legal entities, we can categorise them between national (***) and international companies.

A publication by Estadao in **** shed light about the biggest insurance brokers in Brazil in regards to turnover. In first place (***) is BB Corretora de Seguros with a turnover of nearly *.* billion Brazilian Reais. Following them are Itau Corretora de Seguros and Votorantim Corretora. In the graph below we can see the turnover of top * biggest insurance brokers in Brazil.

Biggest insurance brokers Brazil, ****, in million R$ Source: ****

Moreover, it is important to note how the vast majority (***) of insurance brokers work with up to * insurance companies. Only **% of brokers work with * or more insurance companies [***].

Number of insurance companies brokers work with Brazil, ****, in % Source: ****

3.3 The development of the insurance brokerage market

A study conducted by Klooks in **** on companies operating in the insurance brokerage market allows us to understand with more detail the developments of this market.

First of all, it is important to note the growth of the market. The companies in this industry experienced on average an *.*% increase in turnover and **.*% increase in profit margin between **** and ****. This goes to show how the Covid-** pandemic had little impacts on this industry.

Moreover a very important aspect of this industry is the franchises. This is because many of the leading brokers in the country are subsidiaries of bigger banks. Big Brazilian banks use their consolidated position in the market to try and maximise their profit margins. Franchises and branches experienced a **% growth.

Geographically speaking, Sao Paulo is by far the region that concentrates the most insurance brokers (***).

We can also note a difference between independent brokers and brokers that are part of conglomerates. Because of their higher fixed costs (***), the profit margins of independent brokers is much smaller [***].

Profit margins and fixed costs of different types of brokers Brazil, ****, in % Source: ****

4.1 The different types of insurance available

In the insurance sector, the main distinction is between life insurance and non-life insurance. As far as non-life insurance is concerned, the offer is very diversified, as shown in the table below summarising the different offers:

In particular, we can observe the following trends in the offer: 

Enrichment, especially in the mobility sector, of traditional products with digital devices and safety services, also in response to legislative provisions Increase in the number of customizable products, through warranty extensions, additional services, and coverage to be shared with family or friends in the transport sector In the travel sector, there has been an increase in the offer of instant insurance coverage, which can be purchased online. The development of modular and flexible insurance coverages in the field of risks related to property, natural disasters, and digital activities The enrichment of insurance cyber coverage, aimed at families, professionals and businesses, against the risks of cyber attacks, fraud, theft of data and information The widening of the offer of health policies extended to third parties, regardless of the family structure and cohabitation The emergence of products aimed at protecting the insurance needs of voluntary, cultural, and recreational activities The emergence of products for the agricultural ...

4.2 The changing dynamics of the market

The insurance brokerage market is growing in Brazil, and because of that, the market is becoming more competitive. This means that the players in this industry will need to embrace to the new changes and adapt their offers [***].

Firstly, professionals in this industry need to continue developing their skills in order to be able to provide their clients with high quality services. The capability and skills of the brokers are what make clients trust them. In a market that is becoming increasingly competitive, if brokers do not develop their skills, clients will just find another broker that meets their needs.

Although the insurance brokerage market is one that does not tend change too much over time, recent innovations and investments into technology are slowly changing the sector. With technology becoming ever so important in the sector, this is resulting in the players having to adapt and innovate in order to continue to remain relevant.

What is important is for insurance brokers to be able to embrace technology in order to help them with their business, not to see technology as an opponent. The extent to which brokers are able to take on technology to help them will be a key factor ...

4.3 New offers to face the Covid-19 pandemic

The insurance industry has implemented new measures to provide support for the COVID-** pandemic. These include: the suspension, extension and deferment of premiums for life insurance policies, non-auto damages and auto coverage, the blocking of all actions to recover unpaid premiums and deductibles, the extension of existing guarantees with specific clauses, the inclusion of daily payments or lump-sum compensation in policies and the offer of additional services and new products.

The companies have also addressed the health emergency by adapting their offer and introducing new products for companies and families to cope with the consequences of the pandemic.

Some companies have extended free of charge to their customers, on a temporary basis, guarantees and services already present in their policies, both individual and collective. Others have extended to their clients, holders of health insurance policies that provide a hospitalization allowance, the recognition of the daily allowance even in case of quarantine at home, if positive to the COVID-** buffer. With the aim of guaranteeing the population group currently most affected by the virus, a company has extended the insurable age for health coverage from ** to ** years.

In the travel sector, some companies have extended the guarantees for the reimbursement of costs ...

5.1 Regulations

Given the significance of the insurance industry for the economy of Brazil, it is no surprise to see that the market is highly regulated by a number of different entities.

The practice of insurance brokers in Brazil is regulated by Law No *.***, of ** December ****. This law relates to the following elements of the practice of insurance brokers:

Professional qualification of insurance brokers Brokers' representatives Rights and obligations of the broker Acceptance of insurance proposals Sanctions for malpractice Tax obligations

The page Tudo Sobre Seguros also goes into a little bit more detail about the regulations of the insurance brokerage market in Brazil.

6.1 Segmentation

• Marsh & Mclennan Companies
• Aon plc
• BB Corretora
• Itau Corretora de Seguros