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INSURANCE | 06.18.2020

The important role of life insurance

André Serebrinic

Group Chief Life Insurance and Social Security Officer at MAPFRE Brazil

Life insurance is the order of the day. Naturally, people will be taking a fresh look at their succession planning and wealth protection in the midst of a global health crisis, but these policies are essential regardless of the situation.

First and foremost, it must be made clear that the segment goes beyond protecting against the risk of death. Life insurance includes products covering other adversity, even comprising benefits and the option of redeemable life insurance. The products also involve guarantees concerning retirement and family protection coverage, which are vital in the event of death, disability, serious illnesses and other situations. Behind all of this, and beyond protecting the insured party and their beneficiaries, are issues related to the country’s economy and social well-being in general.

In order to discuss all of the products covered by the life insurance line and highlight the segment’s best practices, MAPFRE has prepared an unprecedented study comparing the market in several countries, observing its development over a ten-year period (from 2008 to 2018).

The study shows that Brazil still has plenty of room for progress. While, on the one hand, life insurance premiums mobilized 130 billion Brazilian reais in the country in 2018—more than any other country in Latin America and the Caribbean—but the penetration rate (ratio of premiums to GDP) in Brazil remains at 2.1 percent. To get an idea of market potential, it’s worth bearing in mind that the rate is 4.5 percent in Western Europe and 8.3 percent in the United Kingdom.

To enable the growth of the Brazilian market, various factors need to be taken into account, including regulatory, fiscal and demographic factors, which have an impact on the Life segment. That’s why public policies play an essential role in creating conditions that boost subscription to these insurance products and highlight the savings function of certain types of product. Cash Value Life Insurance products are a good example — linked to retirement, they offer tax benefits and already account for a large share of the market in Brazil.

But the segment’s progress still depends on another very important factor: the development of insurance culture, which helps people to fully understand this guarantee. The task of helping society to understand the nature of insurance lies with those who are part of this ecosystem. On the part of insurance companies, this means expanding insurance culture and providing solutions for various consumer profiles. For brokers and partners of insurance companies, such as consultants, it entails translating clients’ needs and adapting insurance protection to meet them.

This is a long-term job, but one that is very much required, as other countries’ experience shows the power of life insurance as a driver for social development.