Insurance in Brazil: Market and IT Overview
Growth of the insurance market against the backdrop of a healthy Brazilian economy will see IT investment increase in Brazil.
Insurers must find ways of using technology to become help manage costs and remain competitive in the long-term, according to a new report by Celent, . The report examines key business trends in the Brazil insurance market and their impact IT on spending.
Brazil is considered one of the global emerging markets of which to keep track. Along with its neighbours in South America, it has faced serious economic challenges with run away inflation, devaluation of the currency, huge debt, high interest rates and taxes. The insurance market is similar in size to that of India, and recorded $23,5 billion in premiums in 2005. Albeit small, it is experiencing good growth rates and is expected to double premium by 2011.
A number of factors are driving growth of this insurance market such as a healthy economy, consolidation, and an increasing cultural acceptance of the role of insurance. Issues such as the mandated role of the broker, dominance of the banks, the state monopoly on reinsurance and the increasing burden of regulation will continue to pose challenges to the insurer. With these external challenges, and the continued pressure on costs, technology can play a key role in helping insurers remain competitive in the coming years.
Celent estimates the insurance IT spending in 2006 will be $596 million. Budgets are expected to increase in the coming years as the insurers continue to invest in IT. This budget increase along with the growing market will see IT spending reaching $1.2 billion in 2011.
One of the key technology-supported trends will be the indusrialisation of processes. "Brazilian insurers are behind other countries such as the US and the UK in standardised and automated processes," comments Catherine Stagg-Macey, senior analyst and author of the report. "Technology has a key role to play in achieving this objective in supporting straight-through automated processing with tools such as business rules engines, workflow, document management, and policy management systems"
The 26-page report contains five figures and eight tables. A table of contents is available online.