Challenges, transformations and demands arise and are renewed every day. This is a cycle that imposes itself on the insurance market in Brazil and worldwide, as well as on other sectors of the economy. The only certainty we can have is that this cycle will not end.
The good news is that this drives improvements. However, for these improvements to happen, it is essential to have information, good relationships and an open mind.
It is with this goal in mind that FIDES Rio 2023 will take place in September of next year. This international event, whose central theme is “Insurance for a more sustainable world,” will bring together business people, experts and public officials to discuss the future of the insurance and reinsurance industry in 18 Latin American countries as well as the United States and Spain.
Here are 10 topics that underline the importance of taking part in this debate about the insurance market’s context.
1 – Climate change and adaptation
Incidents caused by longer and more frequent heat waves, storms, floods and forest fires, among other extreme weather events, are increasingly common. This impacts risk assessments and requires adaptations to products and solutions to protect companies and people, but without losing sight of the sustainability of insurance companies.
2 – ESG
Environmental, social and governance issues are a permanent fixture of insurance companies’ strategies. To help this subject gain more traction throughout the sector, regulators in various countries are seeking to standardize procedures, policies and definitions involving business’ sustainability aspects. In Brazil, the Private Insurance Regulatory Agency (SUSEP) issued a circular setting out measures on this topic in 2022.
3 – Rising reinsurance premiums
In October 2022, German insurance giant Munich Re announced that it will stop investing in and insuring new oil and gas projects from 2023 onward. There are already reports that others will follow suit. The departure of players from reinsurance policies, especially those involving projects in industries considered to be polluting (such as oil and gas), should put pressure on premiums and influence people’s appetite for new business.
4 – Sharing and competition, the new order
The days when companies “owned” their customers’ information are long gone. Insurers in Brazil have been adapting to the “open insurance” system since the end of 2021. As in “open banking” (which brings together banks and payment institutions), consumers’ data can be shared between companies, as long as consumers authorize this and in accordance with the rules of the General Data Protection Law. This is generating new business and more competition and innovation, but it also implies technological, governance and control risks.
5 – Endless digital transformation
In the post-pandemic world, digital experiences will set the tone and pace of business. This requires continuous investment, attention to technological developments and respect for consumers’ demands. New business models will emerge and new opportunities will be created, but the price is eternal vigilance, because digital transformation is here to stay.
6 – Protecting the aging population
By the year 2050, 16% of the world’s people will be over the age of 65, up from 10% in 2022, according to the 27th edition of the United Nations World Population Prospects report. The reason for this increase is a combination of rising life expectancy and falling fertility rates. This is an opportunity for the insurance market, but it requires public awareness raising about the value of protection and investment in public policies to deal with this situation.
7 – Health insurance balance
As longevity grows, there is an increasing need for balance between the incorporation of new medications and medical procedures and health insurance pricing. Health insurers are experiencing a dilemma, trying to avoid excessive rises in premiums, which would make it impossible to retain existing customers and attract new ones.
8 – Creativity and new business
Given that anything can be insured, society’s new habits should always be observed. To convert them into new businesses, it takes creativity and investment on the part of the industry and regulatory willingness on the part of the authorities.
9 – Macroeconomic challenges
The International Monetary Fund is forecasting high inflation and low economic growth for the world in the short term. Specifically for Latin America and the Caribbean, the IMF projects GDP growth of 1.7% in 2023, down from 3.5% in 2022. One of the explanations for this is that inflation is expected to remain high, and this will require the maintenance of high interest rates, slowing down the economy’s pace. The macroeconomic situation will not make anyone’s life easier.
10 – Regulatory environment
Regulatory bodies constantly monitor the insurance sector in all countries. For a healthy regulatory environment to exist, it is essential to guarantee an institutional and communicative relationship between regulators and regulated companies. Proper regulation ensures confidence in the system and attracts more customers.