Creditor Insurance in Latin America...•investigation into alternative distribution channels for selling creditor insurance: a number of factors, including regulatory intervention,

Creditor Insurance in Latin America

© Finaccord, 2016 Web: www.finaccord.com. E-mail: [email protected] 1

Creditor Insurance

in Latin America

Series Prospectus

February 2016

Argentina, Brazil, Chile, Colombia, Mexico, Peru

http://www.finaccord.com/

mailto:[email protected]



Prospectus contents

What is the research?

What methodology has been used?

How do lending institutions surveyed break down?

What is the report structure?

What are the key features of the research?

How can the research be used?

How can the PartnerBASE™ be used?

Who can use the research?

What are some of the key findings?

What is the price?

How can the research be purchased?

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What is the research?

Finaccord’s series comprising an overview report titled Creditor Insurance in Latin America plus six

country-specific reports offers updated and detailed insights into the market for creditor insurance,

sometimes also referred to as payment protection insurance or loan-related insurance, in six

countries. Creditor insurance in the region was worth around USD 5.97 billion in gross written

premiums in 2015, including coverage for life and permanent disability as well as the temporary

disability and unemployment elements.

Drawing on the results of a survey of close to 400 lending institutions in the six countries, the series

analyses the provision of creditor insurance by lending institutions, variances in provision by

underlying lending product, operating models for provision of creditor insurance, weighted provider

share of partnerships and the potential for selling creditor cover through distribution channels other

than the lending institutions themselves. The PartnerBASE™ datasets that accompany the reports

detail each of well over 600 creditor insurance distribution deals traced by Finaccord.

Together, the reports, PartnerBASE™ datasets and market data files will provide you with the

definitive guide to current and future opportunities in creditor insurance in Latin America.





What methodology has been used?

Finaccord’s survey of the provision of creditor insurance by lending institutions in Latin America was

carried out during a three-month period between October and December 2015 and focused on all

significant lenders in each country. The research embraces the following information:

• whether creditor insurance is marketed to borrowers;

• if so, in association with which underlying lending products?

• if so, which risks are covered?

• if so, how… through an external underwriter, multiple external underwriters, an external broker, a

joint venture underwriter, a captive underwriter or a combination of these approaches?

• if so, who are the partners used for each product category?

As such, and combined with additional secondary research into product and distribution innovation,

this constitutes an update to the most thorough and comprehensive research into the subject

available for Latin America.





How do lending institutions

surveyed break down?

Finaccord’s universe of lending institutions includes mainstream retail banks, specialised lenders,

automotive captives, building societies, savings banks, co-operative banks, credit unions and retail

sector card issuers. For a full list of the organisations contacted for the research and included in

PartnerBASE™, please contact Finaccord.

Argentina, 70

Brazil, 113

Chile, 65

Colombia, 47

Mexico, 50

Peru, 52Automotive captive, 34

Bank, 142

Co-operative bank, 5 Credit union, 37

Retail sector card

issuer / lender, 33

Savings bank, 22

Specialised

lender, 124





What is the structure of the overview report?

Executive Summary: providing a concise evaluation of the principal findings of the report.

Introduction: offering rationale, description of methodology and some definitions.

Regional Overview: including an overview of both the creditor insurance market and underlying

retail lending markets in Latin America, comparing and contrasting the recent development of the

mortgage, consumer finance and credit card sectors in each country covered. Analysis of the

creditor insurance market includes its segmentation by country, underlying lending product and

cover type in 2011, 2015 and with a forecast to 2019, and identification of the eight largest groups

in these fields by weighted share of partnerships. Also included is a summary of regulatory factors

that could shape the future direction of the market.

Specific country chapters (six): an in-depth analysis of the market for creditor insurance in each

country including: introduction to the banking sector; analysis of the consumer lending and credit

card markets; investigation into provision of creditor insurance by lending institutions and risks

typically covered; overview of operating models used for provision of creditor insurance; analysis of

the weighted share of partnerships of underwriters; size, segmentation and growth rate of gross

premiums written for creditor insurance with historic and forecast data spanning 2011, 2015 and

2019.





What are the key features of the research?

Key features of the reports in this series include:

• quantification of creditor insurance market size, segmentation and growth: how much are these

markets really worth and what is their future development potential?

• consideration of operating models used for creditor insurance: how does the use of captive and

joint venture underwriters by lending institutions differ between countries?

• calculation of weighted provider share of partnerships: Finaccord’s unique quantitative analysis

identifies which underwriters of creditor insurance hold the relationships that offer the most potential;

• analysis of the many types of creditor insurance policy marketed in each country and how the risks

covered vary from one distributor to another;

• investigation into alternative distribution channels for selling creditor insurance: a number of

factors, including regulatory intervention, are increasing the potential for entities other than the

lending institutions themselves to sell creditor insurance in certain countries.





How can the research be used?

You may be able to use this report and the PartnerBASE™ that accompanies it in one or more of

the following ways:

• appreciate the magnitude of the opportunity in creditor insurance in Latin America and how this

breaks down between policies cross-sold in conjunction with mortgages, point-of-sale automotive

finance, other consumer finance and credit cards;

• identify partnership opportunities for creditor insurance and prioritise these according to the

potential that they offer as defined by the size of lending institutions’ retail customer base;

• understand the supply structure for creditor insurance in the Asia-Pacific region and whether

specialists are winning business by virtue of their focused approach;

• assess the extent to which the provision of temporary incapacity and unemployment modules

within creditor insurance policies is commonplace in different countries in the Asia-Pacific region;

• gain insight into the presence of leading creditor insurance market participants including BNP

Paribas, Bradesco, CNP Assurances, Grupo Sura, Itaú Unibanco, MAPFRE, Santander and Zurich.




© Finaccord, 2016 Web: www.finaccord.com. E-mail: [email protected]

Name of organisation Country

Estimated number

of retail customers

(000s)

Product typeProduct

offered?Operating model Partner(s)

Banco Financiero Peru 502.3 Creditor - consumer finance Yes Multiple external underwriters MAPFRE, Sura

Banco Finandina Colombia 95.5 Creditor - consumer finance Yes Multiple external underwriters BNP Paribas Cardif, Liberty Seguros

Banco Finansur Argentina 52.6 Creditor - consumer finance Yes External underwriter BNP Paribas Cardif

Banco Galicia Argentina 4,275.0 Creditor - consumer finance Yes Captive underwriter Galicia Seguros

Banco GMAC Brazil 696.0 Creditor - consumer finance Yes External underwriter MetLife

9

Note - The PartnerBASE™ also includes fields showing the category of organisation, its UHC (where part of a major group) and the UHCs that own

or co-own (in the case of joint ventures) the partners used for each product type.

Source: Finaccord Creditor Insurance in Latin America PartnerBASE

How can the PartnerBASE™ be used?

Choose

operating model

Identify insurance

providers

Look up specific

organisations

Select country

See the estimated number

of retail customers for

each organisation

Choose product type





Who can use the research?

1. Insurance providers: this research is a unique guide to a valuable segment of the personal

insurance market in Latin America – be fully appraised of what developments in creditor

insurance markets could mean for your organisation;

2. Providers of third party administration services: due to its specialised characteristics, insurers

sometimes outsource the administrative processes associated with creditor insurance, thereby

creating opportunities for third-party providers;

3. Banks and other lending institutions: how does your organisation’s ability to cross-sell creditor

insurance to individual borrowers compare with its peer group in Latin America and could you

use a captive insurer to underwrite third-party creditor risks?

4. Regulatory and trade bodies: appreciate market and competitor dynamics in up to six countries

across Latin America from an authoritative, comprehensive and transparent information source

about this often under-documented subject;

5. Management consultancies: are you helping an insurance company with its bancassurance

strategy or evaluating how it can develop in creditor insurance? Understand the current status

of creditor insurance in Latin America, saving time and effort on researching the subject

yourself.





What are some of the key findings?

Source: Finaccord Creditor Insurance in Latin America Model

2011 2012 2013 2014 2015

USD billion

1. Across the six Latin American countries, total consumer

lending balances grew consistently between 2011 and 2015

Argentina Brazil Chile

Colombia Mexico Peru

1,000

800

600

400

200

0





What are some of the key findings? (cont.)

2. Eight underwriters are likely to account for close to 70% of the

value of creditor insurance related to consumer finance in Argentina

Source: Finaccord Creditor Insurance in Latin America PartnerBASE™

CREDITOR INSURANCE RELATED TO CONSUMER FINANCE IN

ARGENTINA: BANK PROVISION RATE AND OPERATING MODELS

CREDITOR INSURANCE RELATED TO CONSUMER FINANCE IN ARGENTINA:

WEIGHTED PROVIDER SHARES OF BANCASSURANCE PARTNERSHIPS

0%

20%

40%

60%

80%

100%

Product offered Operating model (see legend)

JV underwriter

Captive underwriter

Multiple external underwriters

External underwriter

Other

Undisclosed

MetLife, 12.5%

Galicia Seguros,

11.8%

Sancor, 9.2%

BNP Paribas Cardif , 8.2%

Segurcoop, 8.1%

Nación Seguros, 7.3%

Zurich Santander

Seguros, 6.5%

BBVA Seguros, 5.3%

other, 31.1%






3. When viewed in weighted terms, captive underwriters are found likely to

dominate the market for mortgage-related insurance in both Mexico and Peru

Argentina

Brazil

Chile

Colombia

Mexico

Peru

Weighted average

Operating models used for mortgage-related creditor insurance weighted

by number of retail customers of distributor lending institutions

Source: Finaccord Creditor Insurance in Latin America PartnerBASE™

0% 20% 40% 60% 80% 100%

JV underwriter

Captive underwriter

Multiple external underwriters

External underwriter

Other

Undisclosed






4. Key findings from the executive summary of the overview report include:

• across the six Latin American countries, the combined USD 5.97 billion creditor insurance market

in 2015 split between around USD 1.78 billion from policies related to mortgages and USD 4.21

billion from policies cross-sold with other types of consumer lending including point-of-sale

automotive finance, credit card loans and other types of consumer finance;

• an analysis of the weighted share of ultimate holding companies (i.e. groups) of bancassurance

partnerships for all forms of creditor insurance in 2015, re-weighted by country and product market

size, indicates that Bradesco is the leading group by this measure;

• in descending order, it is followed in this ranking by the government of Brazil (by virtue of its

indirect stakes held in insurers affiliated with a number of state-owned banks, most notably Banco

do Brasil and Caixa Econômica Federal), and then in descending order of their weighted share by

MAPFRE, Itaú Unibanco, CNP Assurances, Zurich, Santander and BNP Paribas;

• by 2019, Finaccord predicts that gross written premiums for all forms of creditor insurance in the

six countries will have increased to around USD 8.37 billion, equivalent to a nominal compound

annual growth rate of 8.8% albeit to a real one of 2.2% once inflation has been discounted.





What is the price?

Reports in this series are available as standard PDF documents. The PartnerBASE™ datasets and

market data files that accompany them at no further charge are in Excel format. Prices for these

reports and others in the global creditor insurance series are as follows:

For Singapore-based clients, GST at the prevailing rate will be added to the basic price.

Costs quoted are for a single site user licence only.

For a corporate user licence, please see the next slide for further details.

Invoices can be paid in EUR or GBP, at the prevailing exchange rate, if preferred.

Argentina USD 895 Greece USD 895 Portugal USD 1,195

Asia-Pacific Region USD 4,195 Hong Kong USD 895 Romania USD 1,195

Austria USD 1,195 India USD 895 Russia USD 1,395

Belgium USD 1,195 Indonesia USD 895 Slovakia USD 1,195

Brazil USD 895 Italy USD 1,395 South Africa USD 895

Canada USD 1,395 Japan USD 895 South Korea USD 895

Chile USD 895 Latin America USD 2,795 Spain USD 1,395

China USD 895 Malaysia USD 895 Sweden USD 1,195

Colombia USD 895 Mexico USD 895 Switzerland USD 1,195

Czech Republic USD 1,195 Netherlands USD 1,195 Thailand USD 895

Denmark USD 1,195 Norway USD 1,195 Turkey USD 1,195

Europe USD 8,395 Peru USD 895 UK USD 895

France USD 1,395 Philippines USD 895 Vietnam USD 895

Germany USD 1,395 Poland USD 1,195

CREDITOR (AND LIFESTYLE PROTECTION) INSURANCE IN...





How can the research be purchased?

Simple. Just go to the relevant area of the Finaccord website, create your account (if you do not

have one already) and place your order online. Products paid for online by card will be delivered

immediately by e-mail but please allow up to one working day for delivery by e-mail if you choose to

pay on receipt of invoice.

With regards to the corporate user licence, you will be asked to choose one of the following options:

1. One office, one country: no supplement over and above basic cost of reports ordered

2. Multiple offices, one country: additional 20% over and above basic cost of reports ordered

3. Multiple offices, two to ten countries: additional 50% over and above basic cost of reports ordered

4. Global (unlimited offices in unlimited countries): additional 100% over and above basic cost of reports ordered

Alternatively, you can place an order by sending your request to [email protected], clearly

stating the product(s) required, associated price(s) and billing details for eventual invoice or card

payment receipt.




Documents

Creditor Insurance in Latin America...•investigation into alternative distribution channels for selling creditor insurance: a number of factors, including regulatory intervention,