Regulatory changes supported by Superintendencia de Seguros Privados (SUSEP), a Brazilian state body responsible for insurance operations, should boost competition in the country’s insurance sector and lower prices for consumers, reports Fitch.
Currently, of the 120 insurance carriers authorised to operate in Brazil, around 10% control some 80% of the total premiums issued in the market.
However, regulatory changes promoted by SUSEP throughout the past year should help to increase competition in the region’s insurance market, according to analysis by Fitch Ratings.
In 2020, SUSEP published 16 new resolutions and over 20 circulars as it sought to amend previous regulations and resolutions, and also carried out an increased number of public consultations. According to Fitch, the numbers are relatively higher than in previous years.
“Fitch views the changes as positive and likely to increase competition, make the market more transparent, reduce costs for companies in the sector and lower prices for consumers,” says the ratings agency.
One of the changes made by SUSEP in 2020 relates to the expansion of forms of financing and sources of funds for insurers, whether via subordinated debt or linked to insurance or reinsurance risks (insurance-linked securities or ILS).
“The regulations that address such matters should encourage the Brazilian insurance market as they may help reduce operation expenses for companies operating in the sector,” says Fitch.
Additionally, the ratings agency highlights the implementation of the Operations Registration System (SRO), an electronic registration for insurance operations, which will make Brazil’s insurance industry more modern and should serve to expand supervisory capacity, transparency, and agility of supervision.
“The resolutions that provide for market segmentation rules in four categories should also promote efficiency in the regulator’s supervision processes, as well as the reduction of operating costs for the sector,” continues Fitch.
Analysts expects these resolutions to benefit the consumer market with better prices and competitive advantages.
The resilience of the Brazilian insurance market was tested in 2020 by the COVID-19 pandemic, but Fitch believes that regulatory changes implemented by SUSEP should help the sector return to growth in 2021.
