This is my second short on insurance.
Brazil’s online market looks like it could be fillet mignon for foreign insurers who understand this segment and are willing to deal with Brazil’s labyrinthine bureaucracy.
First, the retail insurance market is growing fast and online is pitifully underdeveloped segment: growth in policies is in double digits but online sales account for less than 1% (compared to more than 50% in the UK). McKinsey polled 4,500 Brazilians of whom 20% said they would “certainly” buy online. A further 50% said they would "very probably" buy online
Second, so far just price comparison is a new idea. There are a host of sites struggling to get their brand recognized and fighting and insurers are moving online gingerly. The arrival of larger players - as rumoured - could shake the price comparison market up, though. Finally, the government is determined to get more coverage for poorer Brazilians through micro insurance and has just licensed the first project – this is a price-sensitive audience to whom online appeals.
The first Brazilian challenger for pure online sales has recently arrived. Segurar.com has hired some heavy hitting consultants and has a successful and lucrative travel insurance business. It is now moving into auto. I talked to Renato Spadafora Ferreira, the COO, reckons they could get 1m customers in five years and 15% lower prices.
I have also been looking at some of the legal obstacles, especially connected to the use of brokers under Brazilian federal and state law. Initiatives that call for the physical presence of a broker at transaction time hang over the market like a dark cloud…
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