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Chilean Insurance Market Overview. London, October 14 th , 2014 Jorge Claude Executive Vice President Asociación de Aseguradores de Chile. Agenda. Chilean Economy & Insurance M arket at a glance Non- Life Insurance Market Life Insurance Market Challenges & Opportunities Conclusions. - PowerPoint PPT Presentation
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London, October 14th, 2014
Jorge ClaudeExecutive Vice PresidentAsociación de Aseguradores de Chile
Chilean Insurance Market Overview
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
5
Inhabitants 16,7 Millions GDP US$ 280.7 billions GDP per capita US$ 18,945 PPP 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
Chilean Economy (2013)
6
2,4
3,7
2,6
7,8 7,8
-1,4
3
4,5
1,5
3
4,5
-2
0
2
4
6
8
10
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
Inflation
65,5
4,6 4,6
3,7
-0,9
5,8 5,95,5
4,1
2,8
-2
-1
0
1
2
3
4
5
6
7
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
GDP Growth
109,2
7,87,1
7,8
10
8,37,2
6,45,7
6,7
0
2
4
6
8
10
12
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
Unemployment
2,7
3,4
2,63
3,4
2,9
1,2
2,4
3,4
4,5
3
0
0,5
1
1,5
2
2,5
3
3,5
4
4,5
5
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014E
Interest Rate (real)
Chilean Macroeconomic Indexes
Source: Banco Central de Chile
7
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.
Chilean Insurance Market (2013)
8
Latin American Insurance Industry (2013)
Source: SIGMA Swiss Re
0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5%0
100
200
300
400
500
600
700
BrasilD: US$ 443
P: 4,0%MM US$ 88.931
MéxicoD: US$223
P: 2,2%MM US$ 27.354
ArgentinaD: US$ 417
P: 3,6%MM US$ 17.317
VenezuelaD: US$ 452
P: 3,6%MM US$ 13.733
ChileD: US$ 664
P: 4,2%MM US$ 11.712
ColombiaD: US$ 209
P: 2,7%MM US$ 10.070
PerúD: US$ 110
P: 1,6%MM US$ 3.354
EcuadorD: US$ 105
P: 1,8%MM US$ 1.659
PanamáD: US$ 322
P: 3,0%MM US$ 1.244
UruguayD: US$ 356
P: 2,2%MM US$ 1.213
Premiums in % of GDP or Penetration (P)
Premiums per Capitaor Density (D)
9
Insurance Industry & the Economy (2013)
631Premium per capita in USD
4.2%Premium in % of GDP
11,076 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.
Life Insurance Companies
33
Non-life Insurance companies
23
Credit Insurance Companies
6
Total
62Insurance Brokers
2.266
Re Insurance Brokers
60
Adjusters
217
Source: AACH based on SVS data
10
Chilean Insurance Industry (2013)
11
(US$ million)
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1,228 1,481 1,552 2,056 2,022 2,396 3,060 3,346 3,913 3,6772,799
3,038 3,152
4,114 3,7614,498
5,9686,295
7,519 7,399
Source: AACH based on SVS data
Chile Direct Premiums (Life & Non-life)
Life
Non-Life
12
(Figures in US$; Census 2002)
2004 2005 2006 2007 2008 2009 2010 2011 2012 20130
100
200
300
400
500
600
700
USD$ 630,88
Sources: AACH based on SVS data and INE
Chile Insurance Density (premium per capita)
Life
Non-Life
Total Market
13
2004 2005 2006 2007 2008 2009 2010 2011 2012 20132.5%
3.0%
3.5%
4.0%
4.5%
4.2%
Source: AACH based on SVS data and Central Bank of Chile
Chile Insurance Penetration (% of GDP)
14Source: MAPFRE and Latinoinsurance
Chile: a very competitive market (2012)
Latinoamérica: Concentración de Mercado, Índice Combinado y ROE por País 2012
< 12% Altamente atomizado o desconcentrado
12% - 18% Moderadamente concentrado
> 18% Altamente concentrado
4,2% 5,0% 5,4% 6,7% 7,2% 9,0% 9,2% 10,6% 10,9% 13,7% 14,0% 14,8% 14,6% 14,8% 16,9%21,7% 22,8%
43,9%
85,0%
0%
20%
40%
60%
80%
100%
120%
ARG ECU CHI MEX VEN PAR COL BRA PAN GUA SAL DOM HON PRI BOL PER NIC URU CRI
Indi
ceH
erfin
dahl
69% 69%77%
88% 88% 89% 90% 92% 94% 97% 100% 102% 104% 104% 105% 105% 106%114% 116%
84%
23% 18% 20% 20%27% 21%
13%22% 17%
11% 8%17%
8% 14% 11%22% 22%
12%19% 16%
0%
20%
40%
60%
80%
100%
120%
140%
PAR* BRA HON SAL GUA MEX ECU NIC PER PAN CR BOL URU COL PR VEN ARG* CHI DOM REG
Razón Combinada ROE
CountryN° of
companiesShare
largest 5Share
Largest 10Leader share
Uruguay 14 90% 98,60% 65,10%Peru 14 89,80% 99,80% 33,40%
Bolivia 14 85,30% 99,50% 21,70%Brasil 116 65,40% 82,90% 20,40%
Colombia 45 54,20% 76,60% 22,80%Venezuela 47 51,50% 72,20% 13,70%Paraguay 34 47,30% 65,70% 20,10%Ecuador 42 40,40% 59,10% 10,50%
Chile 60 36,90% 58,50% 9,80%Argentina 180 35,30% 53,90% 9,80%
LA Market share by country
2. Chilean Non Life Insurance Market
16
Property33%
Motor28%
Engineering5%
Liability5%
Personal Accident4%
Cargo3%
Theft3%
SOAP3%
Credit2%
Marine Hull1%
Others (1) 13%
Non-Life Insurance Premium (2013)
Sources: AACH based on SVS data and SVS
(1) Surety, unemployment; Extended Warranty, IT Fraud etc.
USD
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
Source : Superintendencia de Valores y Seguros (SVS) FECU 2013(1) Credit companies are not included
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%
Total 3.886.655.953 100,00%
62,8%
37,2% Internacionales
Locales
2,577,4; 71%
256,67; 7%
813,78; 22%
Todo Segmento
Industriales/Comerciales
Personales
Market Share by Company (2013)
All lines
Industrial/commercial
Personal lines
Premium
International Companies
Local Companies
Premium
18
Non-Life: a Reinsured Market
41,6%Out of Gross Premiums are ceded
PropertyThe largest (in premiums) ceded line including CAT coverage
1,529Ceded annual premiums in millions of USD
Retained premiums by lines (% of Gross premiums, 2013)
Property Motor Hull Cargo Engineering Liability0%
20%
40%
60%
80%
100%
120%
Sources: AACH based on SVS data
3. Chilean Life Insurance Market
20Sources: AACH based on SVS data and INE
Life Insurance Premiums (2013)
Social Security / Annuities 45%
Disability and Survival (SIS)12%
Mortage10%
Health9%
Universal Life & Index Life
8%
Life8%
Retirement Savings Insurance5%
Personal Accidents2%
Private Annuities1%
Others0%
4. Challenges & Opportunities
22
Challenges & OpportunitiesNew & upcoming regulatory changes
› Tax reform
› Risk based capital law
› Consumer protection regulation
› Market Conduct regulations
› Personal Data protection act
Approved
In Congress
Under Review
Submitted to market for commentsUnder review
Social
23
A larger middle income country with middle and lower classes demanding immediate benefits.
CAT risks; a new model to calculate PML
Challenges & OpportunitiesChallenges
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
We have been working on this and we expect to have the first operative version by the end this year.
Insurance Industry
24
Challenges & OpportunitiesOpportunities
There is a increasing consciousness of demand for liability products and higher insured amounts in such coverages.
Infrastructure
New concessions programme & insurance solutions for existing infrastructure
Liability growth Liability
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.
5. Conclusions
26
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.
Conclusions
London, October 14th, 2014
Jorge ClaudeExecutive Vice PresidentAsociación de Aseguradores de Chile
Chilean Insurance Market Overview
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