Life Insurance In The BRICS Countries · • Social benefits, e.g. unemployment, disability, death...
Transcript of Life Insurance In The BRICS Countries · • Social benefits, e.g. unemployment, disability, death...
2013 Convention 31 Oct & 1 Nov
Life Insurance In The BRICS Countries
Demetre la Grange
2013 Convention 31 Oct & 1 Nov
Agenda
1. Why consider the other BRICS countries?
2. Overview of each country
3. What can we learn from it?
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Don’t underestimate BRICS
“Television won’t be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night.”
Darryl F. Zanuck, Head of 20th Century Fox, 1946
2013 Convention 31 Oct & 1 Nov
Brazil
• Background
• 200m people
• Low penetration of life insurance – around 1%
• Different stages of insurance growth – group, credit life,
individual life
• Insurance framework
• No barriers to foreign insurers entering market
• Potential for state-owned insurer with focus on infrastructure
and other insurance of national interest
• Going through process of transforming their insurance
regulatory body 4
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Brazil
• Developments and current status
• Group life business started growing well approx 10 years ago
– now about 60% of life premiums
• Credit Life growth more recently – about 25% of life
premiums
• Individual life market is small, but seen as the next area of
growth
• Distribution model is key – large Bancassurance market
• Microinsurance also identified as growth area
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Brazil
• Benefits and products
• Significant social benefits for lower paid, eg savings fund into
which employer pays 8% of salary – fund used for
retrenchment, CI, retirement or death
• GLA benefits common
• Long term disability through pension fund
• CI not really seen on individual market – only pension fund
• Educational cover – school fees and educational service
and even national lottery tickets
• Increased focus on lower/middle income market
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Brazil
• Market share of insurers
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Company Market share (%) Bradesco Vida e Previdencia
29.69
Brasilprev 22.82 Itau Vida e Previdencia 22.55 Caixa Vida e Previdencia 8.21 Santander Seguros 6.90 Hsbc Vida e Previdencia 4.26 Safra Vida Brasil 0.88 Icatu Seguros 0.85
Source: FenaPrevi
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Brazil
• Historic growth
2013 Convention 31 Oct & 1 Nov
Source: Munich Re Economic Research
Regional split of 2012 primary insurance premiums in Latin America, in %
P&C: € 64 bn
Life: € 51 bn
Total: € 132 bn*
6.6
44.6
6.3 5.1
13.9
8.2
6.8 8.7
Argentia BrazilChile ColombiaMexico VenezuelaPuerto Rico Rest of Latin America
11.2
32.8
5.0 6.7 11.8
8.5
12.7
11.4 Argentina
Brazil
Chile
Colombia
Mexico
Venezuela
Puerto Rico
Rest of Latin Am.
2.9
58.9 9.3
4.0
16.2
0.8 1.5
6.4 Argentina
Brazil
Chile
Colombia
Mexico
Venezuela
Puerto Rico
Rest of Latin Am.* Including Health insurance
Latin America Insurance split
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Russia
• Background
• 150m people
• Low penetration of life insurance – less than 5%
• Insurance framework
• No barriers to EU insurers entering market
• Bancassurance market
• Little innovation
• Captive insurers in employee benefit area
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Russia
• Developments and current status
• Credit life driving most of the growth
• With profit endowment most popular, because life policies
typically seen as savings vehicle
• Benefits and products
• Social benefits, e.g. unemployment, disability, death
• GLA benefits common
• Long term disability typically lump sum, with very little PHI
• CI common as part of employee benefits package
• Flexible benefits platform starting to emerge
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6.4 3.1
16.8
46.5
2.6
9.4
15.1
Czech Republic HungaryPoland RussiaSlovakia TurkeyRest of Eastern Europe
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Eastern European insurance market
Source: Munich Re Economic Research
Regional split of primary insurance premiums 2012 Eastern Europe, in %
Life: € 18 bn
P&C: € 45 bn Total: € 88 bn*
* Including Health insurance
6.1 2.8
15.9
37.9 2.4
13.6
21.4
Czech Republic
Hungary
Poland
Russia
Slovakia
Turkey
Rest of EasternEurope
15.5
7.8
40.8
7.2
6.8
6.4
15.5
Czech Republic
Hungary
Poland
Russia
Slovakia
Turkey
Rest of EasternEurope
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India
• Background
• 1.2bn people
• Insurance framework
• Large state owned insurer LIC with 70% of market
• Other insurers allowed from around 2000
• IRDA (local regulator) limiting growth since 2011 through
recent legislation around remuneration and selling practices
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2013 Convention 31 Oct & 1 Nov
India
• Benefits and products
• No real social benefits system
• Some GLA benefits as part of employee benefits
• Savings and term cover protection products
• Group credit life
• CI benefits offered by most but only about 10% take-up
• Bancassurance distribution model important
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2013 Convention 31 Oct & 1 Nov
India
• Market share of insurers
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Company Market share (%) LIC 70.68 ICICI Prudential 4.88 SBI Life 4.58 HDFC Standard 3.55 Bajaj Allianz 2.61 Max Life 2.23 Birla Sun Life 2.05 Reliance 1.92
Source: Axco Global Statistics
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India
• Recent growth
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China
• Background
• 1.3bn people
• Individual life market suffers from cultural aversion to dealing
with death - “refundable” approach more acceptable
• Insurance framework
• State owned insurer China Life with 33% of market
• Insurance law started in 1995
• JVs used to enter local market
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2013 Convention 31 Oct & 1 Nov
China
• Developments and current status
• Small-sum life and health insurance focus since 2012 –
microinsurance
• Developing social benefits structure
• 22% pa growth 2006 to 2011, at which point Bancassurance
reduced significantly
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China
• Benefits and products
• GLA death lump sums with CI riders popular
• Typically whole life and endowment policies with CI and
hospital riders
• Universal life products written, but not favoured by all
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Life: € 183 bn
P&C: € 94 bn Total: € 290 bn*
Regional split of 2012 primary insurance premiums Emerging Asia, in %
Emerging Asia: China dominating insurance market
Source: Munich Re Economic Research 20
65.8
19.0
3.9 3.4
0.9 4.6
0.5 1.7
China IndiaIndonesia MalaysiaPhilippines ThailandVietnam Rest of Emerging Asia
* Including Health insurance
75.2
8.6
3.3 4.0
1.0 4.1
1.0 2.8 China
India
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Rest of Emerging Asia
60.1 24.5
4.3 3.4
1.0 5.1
0.4 1.3 China
India
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Rest of Emerging Asia
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Target group: 4 billion
people worldwide;
Almost 500 million risks
covered by
microinsurance
Premium volume:
growth expected and
potential estimated at
up to US$ 40bn
Growing demand for microinsurance
Microinsurance
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Summary and conclusions
• Culture plays an important role
• Distribution model is key
• Regulation can alter the market significantly
• Microinsurance a big focus in various regions
• Don’t just apply “Western” world thinking
• Recognise cycles / “game changers”
• BUT...
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Be careful to jump to conclusions
“Oil is a useless secretion of the earth – a sticky liquid that stinks and serves no useful purpose.”
Academy of Sciences, St. Petersburg, 1806
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Discussion
• Increasing focus on benefits and products overseas?
• What to focus on for next phase of growth in SA?
• Distribution model / marketing / awareness
• Product design / innovation / focus on needs
• Price / perceived value
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