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Chilean Insurance Market
Overview
London, October 14th, 2014
Jorge Claude
Executive Vice President
Asociación de Aseguradores de Chile
Agenda
1. Chilean Economy & Insurance Market at a glance
2. Non-Life Insurance Market
3. Life Insurance Market
4. Challenges & Opportunities
5. Conclusions
The Chilean Association of Insurers
(AACH) is the voice of the local
industry.
It is a 115 year-old institution
representing 53 insurance companies
who account for 96% of Chile’s
Insurance Premiums
1. Chilean Economy & Insurance Market at a
glance
Chilean Economy (2013)




Inhabitants
GDP
GDP per capita
PPP
16,7 Millions
US$ 280.7 billions
US$ 18,945
US$ 22,500
Main Cities: Santiago (Capital 7,5 Mill.); Concepción (1,5
Mill); Antofagasta ( 1,0 Mill); Temuco (1,0 Mill.)
Main Industrial & Economic Sectors: Mining
(Cooper/Iron), Paper Pulp, Fishing, Agro-industry, Wine,
Finance.
Economic Freedom Index (1): 78,7 – 7th place
Competivity Index (2): 4,61 – 33rd place
Gini Index: 0,49 pts.
(1) The Heritage Foundation 2014 Index of Economic Freedom
(2) World Economic Forum – The Global Competiveness Report 2014-2015
5
Chilean Macroeconomic Indexes
Inflation
Unemployment
12
10
10
7,8
8
10
7,8
10
9,2
7,8
8
8,3
7,8
7,1
7,2
6,4
6
4,5
3,7
4
3
2,6
2,4
4,5
3
6
6,7
5,7
4
1,5
2
2
-1,4
0
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013 2014E
-2
GDP Growth
7
6
5
6
5,8
5,5
4,6
5,9
5,5
4
4,1
3,7
3,4
3
2,7
3,4
3
2,6
3,4
3
2,9
2,4
2,5
2,8
3
4,5
4,5
3,5
4,6
4
2
1,5
2
1,2
1
1
-0,9
0,5
0
0
-1
Interest Rate (real)
5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
-2
Source: Banco Central de Chile
6
Chilean Insurance Market (2013)
The Chilean Insurance Market is the 5th largest in Latin
America with the biggest insurance density (premium
per capita) & penetration (Premiums in % of GDP) in the
region.
It is also an essential part of the Chilean economic
strength, managing investments for more than US$ 49
billion (equivalent to 18,9% of GDP)
But it is not only an economically solid market; with a
Self-Regulation code in place for over 12 years and an
active Council appointing an Ombudsman who receives
an average of 1000 cases a year vs. over 15 million
claims paid by the industry, it has a strong credibility in
the economy.
7
Latin American Insurance Industry (2013)
Premiums per Capita
or Density (D)
800
Chile
D: US$ 664
P: 4,2%
MM US$ 11.712
700
Venezuela
D: US$ 452
P: 3,6%
MM US$ 13.733
600
Uruguay
D: US$ 356
P: 2,2%
MM US$ 1.213
500
400
México
D: US$223
P: 2,2%
MM US$ 27.354
300
200
Perú
D: US$ 110
P: 1,6%
MM US$ 3.354
100
0
0.0%
0.5%
1.0%
1.5%
Panamá
D: US$ 322
P: 3,0%
MM US$ 1.244
Ecuador
D: US$ 105
P: 1,8%
MM US$ 1.659
2.0%
2.5%
Argentina
D: US$ 417
P: 3,6%
MM US$ 17.317
Brasil
D: US$ 443
P: 4,0%
MM US$ 88.931
Colombia
D: US$ 209
P: 2,7%
MM US$ 10.070
3.0%
3.5%
4.0%
4.5%
5.0%
Premiums in % of GDP or Penetration (P)
8
Source: SIGMA Swiss Re
Insurance Industry & the Economy
Premium per capita in
USD
Premium in % of GDP
(2013)
Total Premium in
Billion of USD
Chilean Insurance Market grew 3,9% (local
currency, inflation adjusted) in a scenario of a
4,1% GDP growth and a 3% inflation rate.
9
Chilean Insurance Industry (2013)
Life Insurance
Companies
Non-life Insurance
companies
Credit Insurance
Companies
Total
33
23
6
62
Insurance Brokers
Re Insurance Brokers
Adjusters
2.266
60
217
10
Source: AACH based on SVS data
Chile Direct Premiums (Life & Non-life)
(US$ million)
Life
14,000
Non-Life
12,000
10,000
8,000
7,519
5,968
6,000
4,114
4,000
2,799
3,038
7,399
6,295
4,498
3,761
3,152
2,000
1,228
1,481
1,552
2004
2005
2006
2,056
2,022
2,396
2007
2008
2009
3,060
3,346
2010
2011
3,913
3,677
2012
2013
0
11
Source: AACH based on SVS data
Chile Insurance Density (premium per capita)
(Figures in US$; Census 2002)
700
USD$ 630,88
600
500
400
Life
300
Non-Life
200
Total Market
100
0
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
12
Sources: AACH based on SVS data and INE
Chile Insurance Penetration (% of GDP)
4.5%
4.2%
4.0%
3.5%
3.0%
2.5%
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
13
Source: AACH based on SVS data and Central Bank of Chile
Chile: a very competitive market (2012)
LA Market share by country
Country
N° of
companies
Share
largest 5
Share
Largest 10
Leader
share
Uruguay
Peru
Bolivia
Brasil
Colombia
Venezuela
Paraguay
Ecuador
Chile
Argentina
14
14
14
116
45
47
34
42
60
180
90%
89,80%
85,30%
65,40%
54,20%
51,50%
47,30%
40,40%
36,90%
35,30%
98,60%
99,80%
99,50%
82,90%
76,60%
72,20%
65,70%
59,10%
58,50%
53,90%
65,10%
33,40%
21,70%
20,40%
22,80%
13,70%
20,10%
10,50%
9,80%
9,80%
Latinoamérica: Concentración de Mercado, Índice Combinado y ROE por
País 2012
120%
Indice Herfindahl
100%
85,0%
80%
60%
43,9%
40%
20%
4,2%
5,0%
5,4%
6,7%
7,2%
9,0%
9,2%
ARG
ECU
CHI
MEX
VEN
PAR
COL
14,8% 14,6% 14,8% 16,9%
10,6% 10,9% 13,7% 14,0%
21,7% 22,8%
0%
BRA
PAN
GUA
SAL
DOM
HON
PRI
BOL
PER
NIC
URU
140%
120%
Source: MAPFRE and Latinoinsurance
106%
100% 102% 104% 104% 105% 105%
114% 116%
CRI
14
2. Chilean Non Life Insurance Market
Non-Life Insurance Premium (2013)
Marine Hull
1%
Credit
2%
SOAP
3%
Theft
3%
Cargo
3%
USD
Others (1)
13%
Property
33%
Personal Accident
4%
Liability
5%
Motor
28%
Property
1.288.424.664
Motor
1.050.727.549
Cargo
144.725.232
Theft
128.544.090
Hull
67.494.420
Liability
194.332.797
Others
1.012.407.198
Total
3.886.655.953
Engineering
5%
(1) Surety, unemployment; Extended Warranty, IT Fraud
etc.
Sources: AACH based on SVS data and SVS
16
Market Share by Company (2013)
Total (USD) (1)
%
RSA
566.445.436
14,75%
Penta-Security
427.674.051
11,13%
BCI
424.434.263
11,05%
MAPFRE
417.839.719
10,88%
Liberty
342.726.008
8,92%
Magallanes
310.061.606
8,07%
BNP Cardif
251.075.347
6,54%
ACE
232.390.760
6,05%
Chilena (Zurich)
206.951.333
5,39%
AIG
145.772.479
3,80%
Consorcio
106.916.473
2,78%
Zurich Santander
105.266.851
2,74%
HDI
73.554.196
1,91%
Chubb
48.957.721
1,27%
Orion
40.862.754
1,06%
Others
83.649.963
2,15%
3.886.655.953
100,00%
Total
813,78; 22%
Todo
Segmento
All lines
Industrial/commercial
Industriales/Comerciales
256,67; 7%
2,577,4; 71%
Personal lines
Personales
Premium
International Companies
Internacionales
37,2%
62,8%
Local Companies
Locales
Premium
Source : Superintendencia de Valores y Seguros (SVS) FECU 2013
(1) Credit companies are not included
Non-Life: a Reinsured Market
Out of Gross Premiums
are ceded
The largest (in
premiums) ceded line
including CAT coverage
Ceded annual premiums
in millions of USD
Retained premiums by lines (% of Gross premiums, 2013)
120%
100%
80%
60%
40%
20%
0%
Sources: AACH based on SVS data
Property
Motor
Hull
Cargo
Engineering Liability
18
3. Chilean Life Insurance Market
Life Insurance Premiums (2013)
Retirement Savings
Insurance
5%
Personal Accidents
2%
Private Annuities
1%
Others
0%
Life
8%
Universal Life
& Index Life
8%
Social Security /
Annuities
45%
Health
9%
Mortage
10%
Disability and
Survival (SIS)
12%
20
Sources: AACH based on SVS data and INE
4. Challenges & Opportunities
Challenges & Opportunities
New & upcoming regulatory changes
›
Tax reform
Approved
›
Risk based capital law
In Congress
›
Consumer protection regulation
Under Review
›
Market Conduct regulations
›
Personal Data protection act
Submitted to market for
comments
Under review
22
Challenges & Opportunities
Challenges
Social
Insurance
Industry
A larger middle income
country with middle and lower
classes demanding immediate
benefits.
From an insurance perspective
this implies that apart from
lower premiums, consumers
want insurance products and
services delivered as easily and
efficiently as other types of
online transactions, do not like
“small print” and do not
hesitate to use social networks
to claim their rights
CAT risks; a new model to
calculate PML
We have been working on this
and we expect to have the first
operative version by the end
this year.
23
Challenges & Opportunities
Opportunities
Infrastructure
Liability
New concessions
programme & insurance
solutions for existing
infrastructure
Liability growth
The ministry for public works
(MOP) has announced a new
concessions programme in
excess of USD 25 Bio.
Furthermore we are working
with the Ministry to provide
Surety coverage for existing
contracts, business that was
exclusive to banks.
There
is
a
increasing
consciousness of demand for
liability products and higher
insured amounts in such
coverages.
24
5. Conclusions
Conclusions
Chilean economy is growing strong with positive
macroeconomic indexes, a robust fiscal discipline and a clear
legal environment.
Our Insurance Market is an open and sophisticated market
exposed to international compliance standards & regulations.
Risk based capital, market conduct acts, personal data &
consumer protections acts, among other global trends are
main issues in Chile.
Chilean Industry has been tested through natural catastrophes
and economic crises and has proven its strength and
trustworthiness to its clients.
All this confirms that Chile is a good place to do business.
26
Chilean Insurance Market
Overview
London, October 14th, 2014
Jorge Claude
Executive Vice President
Asociación de Aseguradores de Chile