Challenges of microinsurance expansion are discussed in a Microinsurance Network workshop
“There is no point in pointing the finger only at the Government’s regulation, but it is necessary to recognize necessary changes in the distribution and transaction costs of the microinsurance offer”, he said, before an audience that brought together, among others: the Executive Director of Microinsurance Network, Katharine Pulvermacher; the Institutional Relations and Sustainability Manager at Bradesco Seguros, Ivani Benazzi (mediator); the Supervisory Director of Susep, Rafael Scherre; the General Coordinator of Regulation of Mass Insurance, People and Pension Plans at Susep, Mariana Arozo; AM Best Rating President Matthew Masher; Vice President of AM Best Rating, Andrea Keenan; and AM Best Rating’s Senior Latin America Director, Carlos de la Torre.
For Marcio Coriolano, the reduction of these costs, which affect the product, is essential for microinsurance to gain greater relevance within the Brazilian insurance market, mainly because its target audience (the population with the lowest income) is very sensitive to prices, bearing in mind that today the income of 70% of the Brazilian population is below two minimum wages. “An important part of this income goes to transportation, food, rent, restricting the space of family budgets that remains for insurance protection,” he said, to demonstrate the relevance of the costs and conditions of access to microinsurance.
Due to this situation and the prospect of approval of a new regulatory framework later this year, the President of CNseg assessed that the regulatory change, which reduces prescriptions, can make the microinsurance model more effective, something to celebrate, as it will encourage companies in the sector to focus even more on this segment. “Microinsurance is a safeguard for the assets of the population with a lower income. Its role is precisely to contribute to making the irregular trajectory of the conquests of the poorest in a straight and ascending line, reducing the negative impact of financial unforeseen events on their lives. Microinsurance has a vocation to complement the State’s social protection programs and fill any gaps left by them, especially in peripheral countries, such as Brazil ”.
The President of CNseg stressed that the regulatory framework for microinsurance has evolved in recent years, exemplifying this with the shift of the supervisory model, from prescriptive to principiological and collaborative, something that should contribute to the development of this segment.
Also according to him, between 2016 and 2020, premiums for products classified in the microinsurance segments in Brazil grew by more than 55%, going from R $ 228.4 million to R $ 355.4 million in this period, an increase almost two times higher than in the previous year. observed for the Damage and Liability segment, which grew 29%. Also important, he recalled, the increase in the number of insurers that issued microinsurance premiums, which went from 17, in 2016, to 24, in 2020. He added that some other products, which are not formally classified as microinsurance, have been gaining appeal with the lower income populations, such as residential, which between 2016 and 2020, grew 35%.
The President of CNseg pointed out another important and indirect contribution from microinsurance: “The innovations presented for microinsurance operations were gradually incorporated into traditional business models, such as the possibility of selling insurance by remote means or through microinsurance and insurance correspondents. Financial Institution. In addition, technological advances have intensified, driving new approaches to approaching the final consumer, using call centers, internet, cell phones, retail channels, among others, which has allowed to expand the offer of products and offer a more agile treatment, for beyond the personal approach. ”
Although the first steps in regulation have been recognized as advances for the sector, companies, according to Coriolano, understand that the very restricted formatting of products, with the imposition of regulatory requirements higher than those of traditional products, has aggravated the challenge of operating costs, which is determinant for the success of this segment.
He also pointed out that this regulatory framework has matured at a time when Brazilian economic conditions began to deteriorate. “Throughout 2014, the ‘new middle class’ ascension process was interrupted, and to some extent reversed, causing the space for the ‘popularization’ of insurance to be reduced. As I said, we have reached the last quarter of 2020, with about 70% of the population with income from work below two minimum wages (US $ 388). In other words, the vast majority of the population does not even have enough income to build an asset, perhaps to protect it by means of insurance, without reducing costs and facilitating access to the maximum ”.
Also at the meeting, the main points of the study “Landscape of Microinsurance – 2020 ”, which identifies and evaluates the trends and evolution of inclusive insurance products and services, with the participation of 194 microinsurance providers, from countries in Africa, Asia and Latin America and the Caribbean. A brief debate about its conclusions took place among the participants, demonstrating the enormous challenge that marks the global expansion of microinsurance.
The two Susep representatives, Rafael Scherre and Mariana Arozo, advanced the main changes to the microinsurance regulatory framework. They made it clear that the market will have full freedom to design products, establish limits on insured capital (currently R $ 30 thousand) and end the exclusion of coverage limitations.