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AXCO REPORT: BRAZILIAN NON-LIFE INSURANCE MARKET IN DECLINE
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
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."