11 Jun 2020
Posted in Insurance
Brazil’s gross written premium will grow but claims spike will be significant in 2020, says GlobalData
With Brazil becoming a hotbed for COVID-19 pandemic, the country’s insurers are open to paying out on claims even if there is no pandemic clause and there will be a substantial upsurge in the claims in 2020, says GlobalData, says GlobalData, a leading data and analytics company.
GlobalData expects the gross written premium (GWP) in the country’s general insurance market to increase at a compound annual growth rate (CAGR) of 6.3% up to 2024, down from 7.9% in its pre-COVID-19 forecasts. Growth is expected to slow down to 2.0% in 2020, compared to 5.2% previously. However, growth is set to recover to previous levels by 2023. The initial slowing of growth rates and recovery by 2023 is reflected in both the life and non-life sectors.
Deblina Mitra, Insurance Analyst at GlobalData, comments: “Life insurance policies in Brazil typically exclude pandemic risks, restricting the direct loss from the outbreak. However, many insurers are still accepting claims related to the outbreak.”
The country’s regulator announced in March 2020 that tests would be covered as part of basic mandatory cover under private healthcare or health insurance.
GWP in general insurance, in particular, is set to decline in 2020 due to economic slowdown. A formal lockdown has not been in place in Brazil, but the domestic auto industry sector’s activity declined by 90% in the second half of March 2020. This will significantly reduce the demand for motor insurance, which makes up 30% of the general insurance premiums in the country.
Mitra concludes: “However, one knock-on effect from the pandemic will be the rise in digitalization. Insurers and brokers are strongly promoting online claims management (video calls via apps such as Facetime, Skype and WhatsApp), customer support, and distribution via apps, website and social media platforms.”