09/29/2024 – 9:02
The Private Insurance Superintendency (Susep) project to bring new insurers and innovations to the market reaches its third edition with initial effects on the first front, and important advances on the second. Although they still form a small share of the market, companies participating in the program have opened previously unexplored avenues of growth. At the same time, they generated a wave movement that made insurance companies more technological.
Susep’s objective with the so-called regulatory sandbox is to expand Brazilians’ access to insurance, a sector that has a share in the economy of 6% per year, below that of developed countries. The regulator has created an environment with more lenient capital rules for new insurers to emerge and test products that the market does not offer, whether due to the unfeasibility of traditional distribution models or the focus on an audience that does not buy insurance.
“In the sandbox, the insurer is able to test the product based on more flexible regulatory requirements, and enters niches that insurance companies would not naturally enter”, says the director of Market Infrastructure and Conduct Supervision at Susep, Julia Normande Lins . The name sandbox is borrowed from the world of technology, where it designates testing spaces.
Since the beginning of the project, in 2020, companies participating in the first two editions have raised R$160.9 million through the sale of insurance. By way of comparison, the insurance market raised R$209.6 billion in the first six months of this year alone.
If these companies are still a minority in size, Susep sees important results on other fronts. The director mentions that the project’s success rate is higher than that seen among startups, and that the work of new agents also gave a boost to traditional insurance companies. “Today, the insurance company assigns the value of the insurance more clearly. Instead of collective risk assessments, companies are able to individualize them”, says Lins.
The Insurance, Reinsurance and Private Pensions partner at the law firm Lefosse, Luciana Dias Prado, states that the arrival of the sandbox made insurance companies more attentive to the developments of technological tools on the market.
“In distribution this is certainly visible, and also in product formatting.” As examples, she mentions parametric insurance, in which compensation is paid based on a certain, pre-agreed intensity of a natural phenomenon, and also insurance with temporary coverage.
Thomaz Kastrup, Insurance partner at Machado Meyer, considers that the project’s greatest merit is bringing new agents to the insurance market. “And it brought new ideas, some aired by the market, but which did not have the flag raised by any incumbent [empresa tradicional] so that they become practical.”
Turn on and off
Even traditional insurance companies participated in the project. “The sandbox allows us to be freer”, says Leonardo Lourenço, executive at the head of Simple2U, belonging to Mongeral Aegon (MAG). In August, Simple became one of the four companies in the program that won a definitive license.
Simple has become a channel to reach an audience that MAG does not serve in the life and pension sectors in which it operates. The new company sells insurance for smartphones, bicycles and personal accidents, and has around 22 thousand policies. These are insurance products that work on customer demand, what the market calls “on and off”. In traditional contracts, the term is for a period determined by the insurer.
A similar model is operated by IZA, which also obtained the definitive license. The company sells personal accident insurance with a focus on app couriers, with coverage valid during deliveries. The model gained traction with the 2022 federal law that requires delivery companies to take out life insurance for couriers.
“We were born with a new entrant strategy in a segment that no one looked at, which is the self-employed and mainly the last mile of delivery”, says the company’s founder and CEO, Gabriel de Ségur de Charbonnières. With the expansion into new businesses, IZA estimates reaching R$60 million in revenue this year.
Another company looking to become a permanent insurer is Split Risk, which sells automotive insurance for cars up to 30 years old, in prepaid and monthly renewal plans. “Almost 70% of our customers did not have any insurance product”, says the company’s CEO, Pedro Pires.
Split raised R$21.8 million with the product in the first half of the year, which makes it the largest company in the sandbox at the moment. “We had some doubts about the model, and the sandbox was ideal for us to test.” The definitive license will allow the business to scale up.
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