Rebeca Duran

Rebeca Duran

Staff Writer
The Brazil Business


Insurance Culture in Brazil

Rebeca Duran

Rebeca Duran

Staff Writer
The Brazil Business


It appears that Brazilian society has no culture of insurance. The growth potential of the insurance market is large, but that expansion is not self sustainable, it depends on Brazilian society participation.

Brazilians have no Insurance Culture

According to official statistics from Superintendence of Private Insurance, also known as Superintendência de Seguros Privados, the total collections Insurance in Brazil accounts for approximately 3,5% of GDP.

The number is very small, but that doesn't mean Brazil has no potential to achieve a high level on the insurance market. The country may not have a insurance culture, but it has a growing market and a rising middle class, that should be the target to achieve a Brazilian insurance culture in the future.

The Insurance Market opening

Between the 70s and the 80s, the insurance market, pension plan and capitalization, stood stagnant. The high inflation, resulting from years of dictatorship, competition and regulation, inhibiting national culture unaccustomed to insurance, were the major barriers.

Since 1990, with the fall of the military regime, Brazilian market has changed a lot. In 1993 the Real Plan is released, solidifying the foundations of the future Brazilian economic stabilization. Three years after, the country begins to allow the entry of foreign groups controlling local insurers.

Governments have granted insurers greater freedom to set prices and other policy conditions. Several international companies began operating in Brazil and both diversified product offering and increased competition have brought benefits to consumers. In 2010, the country ended a decade of strong credit growth and social inclusion, widening the market prospects and opening the entire insurance market.

The Current Insurance Situation

The insurance market in Brazil is highly concentrated in three sub-sectors: health insurance, personal insurance (life, accident and pension) and automobiles. Together, these insurances represented 85% of revenue in 2011. However, the market has grown significantly in non-traditional sectors such as financial risk, rural, hooves, and others.


Currently, only 25% of the Brazilian automobiles are insured. The markets are most mature in São Paulo and Rio de Janeiro, but still with ample opportunity for growth. Even though the percentage is low, car insurance is the biggest insurance segment in Brazil.

Regarding auto insurance, the class C now represents 41.3% of the insurance contracts of automotives in Brazil. According to Seguralta Franchising, class C automotive insurance hiring almost doubled in three years, as in 2008, the class represented 29.1% of the contracts signed. This represents the increase of this class in the car insurance market.


The lack of awareness of the population about the importance of this type of insurance in Brazil is associated with several factors: the lack of insurance culture by Brazilians, the memory of hyperinflation that prevented the use of insurance as a mechanism for asset protection and competition from private pension plans, which have favorable tax treatment.

The group life insurance in Brazil is more widespread than the individual life insurance, unlike what occurs in developed countries. In group insurances, insurers do not take into account the particular needs of each insured person or his/her family, but the risks that are common to a group of people. Due to the deficiency of income of the majority of the population, the spread of group life insurance has a positive aspect. However, it has little collaboration to develop a culture of life insurance in the country.


Even though security stands out as the most basic need of the new Brazilian middle class, now that they can afford a large quantity of consumer goods, welfare is not yet seen as a priority in the budgets of people.


There is still lack of awareness of the population about the importance of protecting their residences and there is much room for development, since the average ticket is much smaller than people believe.


In Brazil, transport insurance is mandatory, but it is estimated that more than 50% of carriers and 50% of transported cargo in Brazil do not have insurance, and this is basically due to lack of efficient supervision.

Cultural Differences

Despite the gradual growth of the insurance market in Brazil, the country's culture is still far from the existing insurance cultures in foreign countries. In the markets of developed countries, the annual collection of awards is around 10% of the GDP, far from the percentage of 3,5% achieved by Brazil. But why is this difference so stark?

It is often observed that, in less developed countries, the segment of the insurances, apart from the life one, have a lot of weight. In countries where the insurance industry is more developed and more advanced, life insurance and pension gain a significance.

This development, property insurance to life insurance or financial planning, is typical of an insurance market in expansion and development. It is expected, therefore, that the Brazilian insurance market in the near future has characteristics such as a growth in the segment of life insurance and pension plans, and also in health.

Growth and Future Plans

The myth that the Brazilian insurance market is small is a lie, the market is at expansion. In emerging markets the demands of consumers and firms are larger, that permits the use of assets to both protect and disposable income to buy insurance products because of their developing economies and expansion. The new buyers, who represent the bulk of sales, demand simple coverings to protect assets and future income streams.

The opening of the Brazilian market to foreign insurers and reinsurers maintains close harmony with the trend of globalization of many markets. It is a process that, by its breadth, enhances the productive relations as we are seeing in successful cases of countries that have developed in an extraordinary way recently, with the support of capital and foreign markets.