The Funny Thing in Life Insurance 1- The Mayonnaise, Yuck

By Mely Lerman, October 31, 2009
In Holland instead of ketchup they put mayonnaise on the french fries, in France they have PERP, in Israel they have Adif and in Brazil they have lottery...
The funny thing in Life Insurance and Pensios are the little differences. Vincent in Pulp Fiction should be an insurance broker: according to him the funniest thing about Europe is the little differences. (see the whole excerpt at the end of this blog). It is exciting to learn the little differences in the different retirement and life insurance plans. It crosses countries and companies in the same countries. Even in those days of globalization, even in face of the efforts for standartization of the Europen Union from one side and the OECD from another, every Life Insurance company is a whole culture in itself.
The basis for everything is one: the actuarial mathematics. What actuaries and regulators do with this is another thing.
There are some products that gain popularity all over th World - the American IRA, Universal Life, the Chilean Pension Model, Unit Link and other.
However, most of the time companies are lauching completely different products almost every day and even the similar products receive a local color.
In Europe, for example, there is a real need for some standard in life insurance and pensions in order to facilitate the mobility of workers from one country to the other. But if somebody compares the employers savings of England to the one in Greece it will be very difficult to find something in common. In Brussels they are trying to put some order on things but, in fact, every country develops its own products completely with no synchronization with the others. The PERP in France (2005) has absolutely no similar product in Europe. The same is possible to say about the Riester pension in Germany.

In those blogs - The Little Differences in Life Insurance - I am going to describe some of those little differences that I know. I would be grateful if anybody out there wants to contribute.
I have no intent to criticize, nor to analyse the social implications or any other second intentions.
Like Vincent I just thing those little differences are funny.

Brazilian Bancassurance Incredible Numbers

By Mely Lerman, October 23, 2009

Even a superficial glimpse at the Brazilian insurance market will expose the incredible development of the sector – the volumes are increasingly growing at unbelievable rates. The insurance market grew 17% in 2007, 18% in 2008 and despite the world crisis the expected growth in 2009 is 15%. 

The volume of Life Insurance premium is today more than 10 times the volume in 2000. Based on the numbers of Swiss Re I draw a comparison graph between the premium volumes of Brazil (in red and the US (in blue). The index of both is 100 for 1999.

The US volume for 2008 is still 25 times the Brazilian but is even so there is something impressive on the Brazilian market development. The main reason is, of course, the growth of the whole Brazilian economy and the improvement of the purchasing power of the poor.

But there is another reason for this development: bancassurance.

Bancassurance in Brazil succeeded to bring insurance to places and people that never saw a broker in their lives. The atmosphere was favorable: there was no regulations limitation to cross ownership between banks and insurance companies and the banks possess a great number of low income customers and proved to be excellent channels for insurance.

Recently the Brazilian Magazine EXAME published an interesting reportage about the competitive bancassurance market in Brazil. There was a lot of interesting numbers in the article - some of them left me really astonished:

• Insurance is the responsible for 34 % of the invoicing volumes of Bradesco (one of the largest private banks in Brazil)
• According to the American Bank Insurance Market Research Group (BIMRG), 80% of the profit of the Brazilian banks came from their insurance companies
• The share of bancassurance in the market share is 55 % (lower than Italy, Spain and France but greater than any other American country – Columbia is 15% and the US is 2 %)
• The administration cost for bancassurance is 16% of the premium and 19 % for the others

Rio 2016

By Mely Lerman, October 17, 2009

Rio de Janeiro was chosen to be the site of the World Cup in 2014 and the Olympiad in 2016. Those choices are not disconnected to the increasing economic and political influence of Brazil. Brazil is in a positive roll for years. The last economic crisis brought this new Brazil to the attention of the World and the International Olympic Committee choice was, in fact, the recognition of the continuous strengthening of the country.
Those events will also be a major factor in the Brazilian economy from now on and the fade out will take years. It is not only the infrastructural investment in the pre-Games period and even not the revenues the events will bring.
It will brand Brazil as an economic superpower.
The consequences will be a huge push to the Brazilians' self esteem and to the economy of their country.

Spain (Barcelona 1992) and South Korea (Seoul 1998) got out of the Olympic Games as completely different countries in the eyes of the World and in the eyes of themselves. In 1964 the Olympics helped Japan to arise from the wrecks of the World War II into economic prosperity. Beijing 2008 caused China to finish 5000 years of isolationism.
This is not automatic.
On the other side, Greece lost a great opportunity with the Athens games in 2004.
The main difference is that Spain, Japan and China were ready for the challenge. It reflected in the attitude of the government and the people. They wanted to succeed.
Brazil, too, will do everything to make those events unforgettable experiences. The Carnival we saw in Copacabana and the tears in the eyes of Lula brought a new meaning to the selection of Brazil.