Global insurance outlooks 2013

Latin America

  • Share

Latin America (LatAm) markets offer substantial growth opportunities for insurers if they understand the various cultures and business dynamics in the region. Tapping the emerging middle classes here is also crucial, with Brazil and Chile showing particular promise.

With more than 550 million people in the region, and nearly US$130 billion in annual insurance sales, compound growth is the central attraction of Latin American insurance markets.

Insurers must consider the diverse economic, competitive and regulatory forces in the region. Local businesses there are exposed to supply chain and reputational risks that traditional insurance products do not address.

In 2013 successful LatAm insurers will:

  • Grow business through innovation and local market expertise
  • Achieve technology competence to gain market advantages
  • Integrate risk/capital management and transparency with regulatory reforms
  • Understand and expand catastrophe risk-related markets

Expansion through innovation

Market penetration is relatively low in LatAm, and new market entrants in LatAm face challenges from strongly entrenched insurer-distribution partnerships.

Understanding consumer behavior and educating customers is crucial. Fortunately consumers do appear to be embracing new distribution channels, such as social media, and growth opportunities are substantial.

Technology competence

Lower investment returns are squeezing margins; this affects insurers’ business models and product development strategies. Technology competence and strategic investment is one way to break this vicious circle.

High-growth LatAm markets require smart, sophisticated operations. Leaders in the region are investing in technology to achieve efficiencies, improve underwriting/claims analytics and target profitable market segments.

Analytics is particularly important. Deep data analysis can produce results, but only if insurers make sufficient investments in technology and talent.

Transparent risk management

As solvency regulation develops, demand for improved enterprise risk management (ERM) is increasing. This is driving industry consolidation and sharper competition.

Sophisticated risk and capital management applications might be the best long-term strategy to achieve a competitive edge in traditional markets and expand into new ones. As companies increase risk transparency, stakeholder confidence in their operational and financial capabilities will grow.

Catastrophe risk-related markets

LatAm is highly exposed to substantial catastrophe-related losses, including those from hurricanes, tsunamis, earthquakes and flooding.

This exposure requires sophisticated risk-management tools and corporate governance tuned to the unique risks of the region.

Download the 2013 Latin America insurance outlook for more insights into this market.