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22 August 2016

Axco Insurance Information Services (Axco) has released its latest country report on Brazil, underlining the challenges that the country's insurance industry faces.

Despite remaining the world's seventh largest economy, developments in the last 12-18 months suggest that it will be 2017, at the earliest, before any significant recovery occurs in Latin America's largest insurance market. While the country's insurance system remains stable, and continues to attract interest from potential new entrants, it has suffered from Brazil's current political and economic problems.

Growth in the non-life market has generally exceeded GDP growth in recent times but the market declined 4.4% in 2015 following economic recession after averaging 14.8% annual growth over the three previous years. The outlook for 2016 is not considered any better, accounted for by the slowing construction market and a highly competitive rating environment in most classes of non-life business.

The disparity between rich and poor in Brazil continues to cause uncertainty amongst (re)insurers as to the pace and scope of penetration levels in the non-life insurance market but, the long term outlook remains bright due to a steady increase in public and private sector investments as a result of a growing middle class and the country's natural resources.

Tim Yeates, Managing Director at Axco commented: "The main challenges Brazil faces are poverty and the country's minimal exposure to major natural perils; thus casting doubt among the population as to the value of insurance. However penetration levels should increase in the mid to long term, driven by a growing economy and expanding middle class."