90 percent of Lat-Am life market to be gained
A potential 90 percent of the life insurance market in Latin America could be reached if re/insurers seek to improve consumer understanding in the region, according to Swiss Re.
The latest Latin America Customer Survey Report says that “perception of affordability is the key barrier to taking out protection, but surprisingly, many consumers indicate that they would be willing to pay a considerably high monthly premium for life insurance coverage so long as the product contained simple terms and conditions”.
The report which examines responses from 5,001 individuals aged 21-70 in Brazil, Mexico, Chile, Colombia, Peru, and Puerto Rico, reveals that fear of suffering from a serious illness ranks as the biggest concern, yet only 21 percent of consumers believe that they hold the appropriate cover.
"There is a sizable discrepancy between what consumers fear and the protection they currently have," said Margo Black, head of reinsurance Latin America South for Swiss Re. "There is no doubt that long-term care cover is one of the most promising fields of future potential for insurers."
When asked what might motivate them to buy certain types of life insurance, respondents cited the need for health cover from a serious illness (38 percent), the affordability of long-term care (37 percent) and the fear of an unplanned drop in the standard of living (30 percent) as the most significant factors.
The survey revealed that nearly half (45 percent) of survey respondents currently hold a traditional life insurance policy, and that people already holding policies are more likely to purchase additional cover.
Wealth was also a considerable factor in penetration levels with uptake ranging between 23 and 30 percent among higher wealth brackets and between 8 and 10 percent for people with the lowest incomes.
"There is significant potential for growth among lower income earners via the development of an effective micro insurance program with affordable products," says Alejandro Padilla, head of reinsurance Latin America North for Swiss Re.
Other findings included that despite the considerable life protection gap on a country level, Brazilians are the least concerned about their financial situation if they were to lose coverage, while in Mexico 74 percent of the population feel vulnerable to the risks of physical illness, injury, disability, critical illness or healthcare treatment. Despite relatively high levels of life insurance protection, policies covering these additional risks are little-used in the market.
One identified challenge for insurers is the significant percentage of the population who have not considered taking out an insurance policy, which Padilla suggested could be tackled with awareness campaigns.
