As one of the fastest growing and promising one in the world, the Brazilian insurance market has become quite attractive for potential partners and investors from many countries. In addition, the Brazilian economy is the most powerful in the region and has a significant impact on world markets.
The development of insurance in Brazil began in the XIX century with the opening of ports of international trade and the need for marine cargo insurance. The main commodity supplied at that time by Brazil to European markets was coffee. For quite a long period, insurance was regulated by acts of civil law in Portugal. However, gradually, the country will build its own legislative base for insurance. So, in 1850 the Commercial (trade) code of Brazil came into effect. This document stipulated the regulation of both marine insurance and property insurance which is on the ground. In this case, life insurance in Brazil was allowed only after amendments made to the Commercial Code in 1855. In 1966, a special decree-law created the SUSEP, the special body for the supervision and regulation of Brazil’s insurance market within the Ministry of Finance of the country. The SUSEP issues licenses to insurers, reinsurers and brokers, regulates and supervises insurance operations, issues permits for new insurance products.
Insurers in Brazil can be conditionally classified in several categories.
1. Insurance companies offering various types of life, property insurance as well as working with pension funds.
2. Companies offering investment life insurance.
3. Companies offering compulsory health insurance.
In addition to the license for insurance activities they must obtain accreditation from country’s Ministry of Health. Any changes in the management of insurers must be approved by SUSEP. It is mandatory to communicate any change in the structure of the owners of the share capital to the supervisory authority. In addition, there are a number of requirements for insurance companies. To carry out their activities, they, in particular, must have a sufficient level of capitalization and solvency, a transparent ownership structure.
One of the most popular insurance products in Brazil is life insurance. Insurance programs are diverse and offered both for individuals and as part of corporate insurance. Determining the price of risk must consider the branch of economy where the policyholder operates. Life insurance involves payment in the event of death of the insured.
The pension insurance existing in Brazil provides for the monthly payment of insurance contributions by the insured until retirement and payment of the insurance amount once the insured retires. The pension program is quite popular and fees for this type of insurance account for more than 50% of all personal insurance fees.
The liability insurance for vehicle owners is the second most popular one in terms of insurance premiums in Brazil, which is mandatory. There is also optional vehicle insurance. However, it is not very popular due to the rather high cost.
Each insurer establishes its own procedure for settling losses, but it must be within the general rules defined by country’s legislation.
In general, the Brazilian insurance market is one of the most dynamically developing market in the world which makes it attractive for international companies.