By Rob Starr, Content Manager, Big4.com
In spite of increased competition in the Latin American insurers market will sustain growth and profitability in 2013 due to emerging middle classes, knowledge-driven innovation in products and distribution, and advanced risk and capital management, according to Ernst & Young’s new Global Insurance Center 2013 Latin American Insurance Outlook
In organization’s first Latin American insurance outlook, Ernst & Young talks about compound growth opportunities, slow-to-mature insurance market development and the rising need for catastrophe risk cover. Ernst & Young believes these pursuits, among others, are critical in these growth markets:
- Capitalizing strategically on substantial compound growth opportunities: Brazil’s booming economy and emerging middle classes throughout Latin America present tremendous opportunities for sustainable premium growth. The region’s relatively youthful population (25% under the age of 15 in Brazil, Mexico, Columbia and Chile) offers potential for greater asset growth and compound sales over the life span of these consumers. As these markets develop, consumer protection authorities are focusing more on insurance and related pricing, commissions and customer rights.
- Expanding markets through innovation directed by local expertise: Flexibility, innovation and strategic alliances that improve cost efficiencies and respond to emerging customer preferences can enhance market positions and technical strength. With market penetrations less than in developed countries, insurers face higher distribution costs and the need to educate customers about insurance. As consumers embrace new distribution channels and wider use of the internet and social media, understanding customer behavior can guide new and expanded systems for insurance product distribution.
“This is an exciting time in these emerging markets, with significant opportunities particularly in Mexico and Brazil, as well as some of the smaller markets like Peru,” says James Littlewood, Ernst & Young LLP, who focuses on the Latin American market.“ “With the upcoming regulatory reform, countries such as Chile and Mexico are primed to integrate advanced risk and capital management measures for future compliance.”