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Insurance in Brazil



Insurance appeared in Brazil in 1808 with opening of ports of Ioann VI, and at the beginning of intensive navigation with all countries. The first insurance company in Brazil was "boa-fe", she was born in Baiya, at the center of sea navigation. Till 1822 sea insurance here was independent. Less than in thirty years later it it was published in the Trade code which regulates operations from sea insurance, the prohibition of life insurance of the free people. Taking into account progress, owing to, the new companies which were engaged in other types of insurance, such as a fire and loss of slaves, insurance, events connected to seasonality, etc. were created. In 1855, the insurance company in Rio de Janeiro which the first in Brazil was engaged in life insurance was based. Some years later, lodged in Brazil some foreign companies which brought to the country specific experience. With Republic proclamation, insurance business in all its forms, is regulated. The resolution became effective in 1916, are regulated by the Civil code, as well as in the Commercial code in relation to sea insurance, and all remaining, including life insurance. In 1935 it based that shall become the largest insurance company in Latin America, insurance Atlantic the National company today Bradesco of Seguros. In 1939, the institute on reinsurance of Brazil (MBR), with assignment to realize reinsurance monopolies in the country was created. Already in 1966, from the decree law No. 73 publication, also created national system of private insurance with creation General control of private insurance (SUSEP), official the organ which is realizing operations of insurance.

STRUCTURE OF THE MARKET OF INSURANCE AND REGULATING AGENCIES

INSURANCE MARKET

The national council of Private Insurance (CNSP) is responsible for determination of the leading principles and rules for private insurance. The president of CNSP - the Minister of Finance who enjoys support of representatives of the Ministry of Justice, the Ministries of Social Welfare, Federal Agency of Private Insurance (SUSEP), the Central Bank of Brazil (BACEN) and the Brazilian Commission of the Exchange of Securities (CVM). CNSP is an agency which as selects the development directions in the field of insurance, regulates questions of mandatory insurance and sets limits of insurance operations in Brazil. Reinsurance operations in Brazil are within the exclusive competence (as monopoly) to IRB - Brasil Resseguros SA which regulates joint insurance, operations of reinsurance and a concession of part of risk. SUSEP - regulating and inspection agency for insurance, capitalization and the open private market of operations of pension funds, and responsible for output of permissions, study and interference in affairs of the companies in case of origin of failures in operation of any component of the market. It is also responsible for output of permissions for again appeared insurance companies, private open legal entities for operation with pension AND operations of the companies of capitalization, for regulation of insurance operations, approval of insurance plans which are provided in the market and monitoring over insurance brokers who shall be accredited by SUSEP.

HEALTH INSURANCE

The insurance companies specialized on insurance of health and operation of operators under observation of National Agency on Additional development of Health care, the government agency connected to Ministry of Health which is responsible for regulation, monitoring and study of additional programs of the help in health care area. The purpose of Agency consists in implementing public interest in the field of additional programs of the help to health, to regulate operation of insurance operators, including their relations with suppliers and customers, and to execute the actions connected to health care in Brazil.
BASIC RULES OF THE BRAZILIAN INSURANCE MARKET

Establishment of insurance companies, the companies of capitalization and the additional legal entities working in the field of pension plans, depends on preliminary approval of SUSEP which needs to be received beforehand. Requests for approval shall contain the minimum elements, such as a sign and identification of future managers, with the proof, that that they have a financial ability, compatible to the obligation; representation of structure of control; proof of an origin of funds; the proof of good position of these managers before controlling agency in Brazil and abroad if those take place, specifying of other investments available in Brazil or enclosed in other Brazilian companies future managers when it takes place. After receiving approval, shareholders shall submit documents that the company could be included in lists. The permission provided by SUSEP, awaking with the proof of execution of all conditions of registration restrictions on administrators and managers, and existence of the minimum necessary capital.   Permission to work is provided by the resolution SUSEP published in Official Gazette.  


REGISTRATION OF OPERATORS

To work in a sector of insurance of health, it is necessary to get permission from Agency, right after registration of the operator, registration of a product and submission of the business plan provided that this information won't comprise contradictions. In case of a registration response, the company, probably, will be able to continue the activities if it has stable clients. Existence of clients also hinders with canceling of registration for a row of insurance products.

Characteristic of the insurance market of Brazil

The insurance market of Brazil totals about 150 insurance companies. Insurance premiums are distributed generally among the following types of insurance: life, car insurance (including the CMTPL), personal insurance. Brazil, being the largest insurance market of Latin America (44%), in recent years shows almost 30% gain of the insurance market annually (tab. 1). Having such high weight in the region, the Brazilian insurance market occupies only 0,96% from universal, thus 18% of the insurance market of the countries of BRIC are the share of this country.

The economic reforms which are carried out by the Brazilian government in the last years (implementation of the plan of economic stabilizing, process of canceling of state monitoring, market opening for foreign insurers, implementation of the program of privatization), had deep impact on the insurance market.   Opening in 1996 of the market for foreign participants made possible involvement of the foreign capital and led to origin of new products, receiving technologies and knowledge which helped branch development.   Now the foreign capital occupies about 35% of the market, in the market there are such foreign insurers, as AIG, Allainz, Cardif, Generali, ING, Prudential, Zurich. 

It is important to mark that level of penetration of insurance permanently grows in Brazil. In 2007 this index made 3,0% whereas in 2000 this index was at the level of 2,1% though, of course, for the present it isn't comparable with indexes of the developed countries. For example, a share of insurance in gross domestic product of the USA — 8,9%, and in Great Britain — 15,7%. Other major index of development of insurance branch — insurance premiums per capita — in 2007 is recorded at the level of 202,2 US dollars that is 41,3 dollars more, than last year.

The present stage of development of the Brazilian insurance market is connected to reform in the field of reinsurance. In 2003 the SUSEP agency (The Superintendence of Private Insurance) began the process of upgrade based on the international standards, the developed markets (IAIS Core Principles) accepted on the majority. Not implementation of innovations, and preparation of liberalization of the market of reinsurance was the main task. Changes concerned such areas, as, for example, introduction of a new tax mode which encourages service of resources of pension plans in long-term perspective, measures for protection of interests of holders of the insurance policy, possibility of use of these conditions as warranties in housing financing, upgradeability of biometric tables to reduce insurance risks.

In January, 2007 the state monopoly in the reinsurance market that became one more argument in favor of attractiveness of the Brazilian market for foreign insurers was removed. Earlier, since 1939, reinsurance in Brazil was exceptional a prerogative of the government and was carried out by the Brazilian society of reinsurance (IRB Brazil Re). IRB Brazil Re was organized as association as equal property between the federal government and insurance companies. Its creation first of all was aimed at maintenance and development of national insurance companies and outflow lowering from the country of foreign currency. IRB Brazil Re regulated not only reinsurance, but also joint insurance and retrocession operations. Now, according to the adopted law, regulation of joint insurance, reinsurance and transactions of retrocession and their mediation will be the task of the insurance CNSP regulator (The National Private Insurance Council).

The law provides three different types of the reinsurance companies which are authorized to work in Brazil:

1) national overcautious persons, namely overcautious persons with the registered offices in Brazil and registered as the societies which single purpose is carrying out operations on reinsurance and retrocession transactions;

2) the allowed overcautious persons, namely overcautious persons with the registered offices abroad and with representation in Brazil which, according to requirements of the law and rules, applicable to transactions on reinsurance and retrocession, are registered in SUSEP for carrying out transactions of retrocession and reinsurance;

3) the overcautious persons working at the market it is irregular, namely the foreign companies on reinsurance with the registered offices abroad without representation in Brazil which after execution of the requirements set by the law and rules, applicable to reinsurance and retrocession, are registered in SUSEP for receiving permission on the specified transactions.

Category: Insurance history in the different countries of the world | Added by: Chance23 (27.04.2014)
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