With the Brazilian economy slowly retaking traction after a long economic and political turbulence period, it is interesting to look at this country in the light of its insurance market, that generated BRL $ 116 Billion (USD $ 30B) in 2018 considering P&C and life risks, just 1,7% of GDP, according to CNSEG – Insurance National Confederation, basically coming from the traditional bureaucratic way.

Life insurance generated BRL $ 38B (US $ 10) but with 80% of total population still uninsured and auto insurance BRL $ 35B (USD $ 9,2B) with only 30% of vehicles insured. These are the biggest line of business that show the high potential of development of the main latin america market.

Moving to Liability risks, such as Casualty, D&O, E&O/ Medmal, there is a BRL $ 1,7B (USD $ 450M) GWP according to SUSEP – insurance superintendency, which means very low penetration given the number of large companies, SMEs and individuals professionals.

Other classes of risk, property, cargo marine, homeowners, surety and others also have opportunities of growth, but interesting to point out risks like cyber, so incipient in a country with 139 millions internet users, 122 millions social media users and 110 millions mobile social users.  

Another example is the environmental insurance, that is too small that calls the attention given the importance of Brazil for the global environment, not only the amazon forest, that is itself hugely important, but Brazil owns nearly a fifth of words water reserve and it is important to remember Brazil is highly dependent of its agriculture business, being the top producers with China, India and USA. By the way, the dam collapses occurred twice in just three years killing hundreds of people and affecting the economy of thousands are not isolated case and the insurance underwriters has serious pain to understand and underwrite all sort of environmental risks.  

Despite all the insurance market understanding and desire for changes, the digital transformation is in early stage, driven by the traditional players and focused in few areas.

There is no official statistics of investments in insurtechs or any other venture focused to disrupt the insurance. There is nothing similar of what it is happening about investments in US, Europe and Asia.

The most knowns cases are related to a governmental bank owning and investing heavily in startup focused to distribute insurance online, big carriers sponsoring acceleration programs and some startups invested by venture capital funds.

By the way, the vast majority of the insurance startups are focused to provide a better customer experience in the insurance selling process, through nice and easy websites or even Q&A chatbots.     

The traditional insurance carriers are using technology to reduce operational costs, hiring IT companies to develop solutions to provide brokers with rate, quote, bind and issuance systems, bots to handle consumer lines claims faster and cheaper, apps to get closer to the policyholders and chatbots to eliminate the necessity of big call centers .

Based on the above described, there are many opportunities non explored  related to the following areas:

• On demand insurances. The vast majority of C-levels foresee the future people will demand an insurance that can be adapted according to the level of risk exposed in real time;

 

• IOTs for auto, Homeowners, equipments, life, aviation/ boats. Just Cargo and Marine that uses sensors to track and recovery cargos once the level of thefts are very high;

 

• Actuarial is done based in small datas collected from past events. The transformation for more sophisticated predictable models can make the pricing more adequate to the risk reality of each insured individually;

 

• Claims is the most important moment and is obviously the reason of the insurance, but the experience so far is the same as decades ago from the client perspective. Fraud prevention is welcomed in the market where around 30%   of the total claims are considered intentionally forged;

 

• Underwriting, mainly for large risks are done based on manually written questionnaires and the risk acceptances decisions are taken based on the underwriter opinion.

 

• For IT, the startup is already helping to change the mentality of cheaper, faster and more constant deliveries from the old expensive and long big projects

I am personally missing solutions for the Agriculture risks. There is none startup focused in insurance for agriculture, beef and poultry in the 4th largest producer in the world;  

Although the financial system in Brazil is highly digitized, the insurance industry traditionally moves slowlier, but with the lower interest rates and more competition, this scenario can push the players to more efficiency and innovation. Surprisingly, the regulatory environment is favorable for innovation. Of course the mission of a regulatory agency is to protect the market and assure the company’s solvency, but some events I participated I heard from SUSEP representatives the desire to collaborate with the innovation.    

Therefore, there are many opportunities for digital in an big scale economy that can be even an excellent trial balloon for multinational companies reply in US, Europe and Asia.