Standard and Poor’s recently released a report on the Brazilian reinsurance market entitled “Brazil’s Reinsurance Market: What Has Changed in the Past Year?” The core conclusion of the report is that, despite the large influx of foreign reinsurers since the market’s opening in April 2008, IRB-Brasil Re continues to dominate the market and change is likely to come slowly to Brazil:
Even though IRB-Brasil Re is still the leader, Standard & Poor’s Ratings Service expects that the reinsurance industry’s opening will be transformational. IRB-Brasil Re is adapting itself to a more competitive business, and newcomers are innovating to compete with a well-established player. In the end, all should benefit: increased transparency, competitive prices, and better products should create a more developed market.
New entrants to a market generally introduce new products, new practices, and innovation. IRB-Brasil Re will likely have to evolve to match the newcomers’ agility and innovation. And it may have to fight to maintain its relationship with the country’s strongest insurers, which are probably better prepared to handle direct negotiations with the international players.
However, we don’t expect these changes to happen overnight, and we could even see a decrease in the number of registered reinsurers in the future if the market doesn’t expand to accommodate such a large number of players.