|
|
 |
|
Viewing report
|
|
|
|
Argentina Insurance Report Q1 2012
Business Monitor International, Dec 2011, Pages: 73
Business Monitor International's Argentina Insurance Report provides industry professionals and strategists, corporate analysts, insurance associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Argentina's insurance industry.
- At first glance, Argentina looks like a medium-sized - but rapidly growing - insurance market, which is open to entry by any multinational company that wishes to establish operations in the country.
Domestic and foreign banks, as well as insurers, perceive there to be advantages from bancassurance.
- In practice, non-life penetration appears to be stuck at a fairly low level, life density is small and the competitive landscape is ludicrously fragmented. Brazil is an insurance market where established protagonists see opportunities from massive distribution deals with foreign multinationals. Argentina is a market where there may be significant barriers to exit.
- There is no obvious reason why the constraints faced by the insurance sector should disappear anytime soon. The nationalisation of the private pension funds in late 2008 stands out as a classic reason why Argentines with the wealth and desire to save for the future will likely use channels other than life insurance from a locally-regulated company.
Argentina remains an insurance backwater. Superintendencia de Seguros de la Nación (SSN)’s latest data indicates that in Q111 non-life and life insurance premiums were about 17% and 34% higher than they had been a year earlier. However, the growth in the non-life segment is almost entirely the result of the increase in nominal GDP. Life density continues to remain at a low level. By most metrics, the insurance sector and the various entities that comprise it (be they local companies or subsidiaries of multinational giants) are undersized. Risk-tolerant Argentine households and businesses are using non-life insurance to a significant extent. However, it is difficult to envisage that they will buy a significantly greater variety of products, nor that they will bear meaningfully higher premiums. The very low life density indicates that, unlike in Brazil (for example), there are many other attractive channels for organised savings.
We do not see any catalyst for change in the life segment. Although Santander and Zurich will be combining their businesses in Argentina (as in the rest of Latin America) in early 2012, it is not clear that this will have a major impact on the competitive landscape. Given the challenges previously faced by the country’s savers (e.g.: at the time of the nationalisation of the private pension funds in late 2008), it is perhaps surprising that premiums have come to exceed US$1.5bn per annum. The life insurers themselves have to find suitable long-term assets to offset the liabilities associated with the policies that they write. Historically that has been quite difficult in Argentina, and probably remains the case.
Given the potential for economic growth, the outlook for the (much larger) non-life segment looks more favourable. However, this is partly because the relationship between the insurers and their clients is shortterm by nature. In a market that is dominated by small, often mutual, operators that do not clearly have pricing power, it is difficult to identify which organisations will be the clear winners from the development of the non-life segment. Currently, with just under 100 companies operating in the non-life segment all lines - with the exception of ART - are extremely fragmented and future consolidation is likely.
Product samples
A sample for this product is available. Please Login/Register to download this sample.
|
|
|
|
