Insurance from Copacabana to Ponta da Piedade

The two countries have many things in common, such as language and their dynamic growth, but on closer inspection, they could not be more different. Jonathan Höh and José Manuel Fonseca take a closer look at the insurance markets of Portugal and Brazil.

MDS is the market leader in Portugal with almost 300 employees in 9 local offices and in Brazil among the top 3 insurance brokers, with more than 500 employees in 12 locations.

HÖH: José Manuel, tell us something about the insurance markets in Portugal and Brazil.

Fonseca: Let’s start with Portugal. Here, the insurance market is highly developed – in terms of population – at just under 5%, but of course much smaller than the Brazilian insurance market. However, Portugal is currently experiencing a growth spurt due to the events of the last few years. For example, the pandemic has led to an increased demand for health & benefits solutions. We are experiencing an upward trend, especially in health and accident insurance, which is expected to continue. In addition, Covid-19 and the global natural disasters have unfortunately led to a massive hardening of the market in Portugal as well. In property and business interruption insurance, liability insurance, but also in financial lines such as D&O and cyber, capacities are tumbling and premiums are rising, in some cases massively. In summary, the Portuguese insurance market is characterised by stronger demand for personal insurance, especially health insurance, and despite the tough market environment, also for cyber and D&O insurance. In addition, there is significant growth in retail and insurance related to e-commerce platforms, B2B2C as well as online sales.

The Brazilian insurance market is also developing well. The main drivers here are agriculture, livestock, health and technology, with the latter gaining tremendously in importance due to the exponential increase in teleworking. We expect this trend to translate into increased demand for cyber insurance in Brazil as well. Agricultural insurance has also seen the largest growth in recent years, with a 30% increase. Other booming areas, partly due to the pandemic, are surety and credit insurance.

Brazil is also attractive to foreign investors but is considered a high-risk country in terms of stability, corruption, bureaucracy and currency fluctuations. Therefore, hedging political risk is important.

HÖH: Let’s go into a little more detail. Where do you see the main differences?

Fonseca: In Portugal, an EU member, most insurance regulations are similar to those in other EU countries. After all, they are based on EU regulations and directives. For example, motor vehicle liability insurance has been compulsory for forty years, and the scope of coverage is at the European level. Brazil also has compulsory third party motor insurance, but at such a low level that it does not provide sufficient minimum protection. This means that international corporations are well advised – especially when travelling on business with rented cars – to purchase the so-called “non-ownership clause” as a protective cover in their global liability programmes to guarantee a minimum level of protection.

Brazil, unlike Portugal, is a broker market. This means that in Brazil it is mandatory to purchase insurance through an insurance broker. Another key difference that is relevant for large international companies, concerns the reinsurance capacity. In Brazil, reinsurance is highly regulated. Many companies have to reinsure through the largest Brazilian reinsurer IRB, Instituto de Resseguros do Brasil, while in Portugal risks can be freely placed on the international reinsurance market. 

HÖH: What distinguishes the MDS Group as a partner for the industry?

Fonseca: MDS was founded in Portugal over 35 years ago. From the beginning, we have strived to build a global company that challenges standards, sets trends, modernises processes and expands business areas and portfolios. With our presence in seven countries – Portugal, Brazil, Spain, Angola, Mozambique, Malta and Switzerland – MDS is a strong partner for the industry and an independent leader in several markets, with Portugal and Brazil being our two largest markets.

Since 2017, we have also been Lloyd’s broker, incidentally the only one from a Portuguese-speaking country.
We will continue to focus on digital transformation as one of our strategic priorities, investing in technology, software development and teams of experts.

For example, we have developed an app that allows our clients to access their insurance portfolio easily and quickly via mobile phone. To meet the need for efficient processes, we are also using digital tools to manage most administrative tasks, enabling both our clients and our teams to invest freed-up time resources in high-quality activities.
 
About José Manuel Fonseca
Jose Manuel Fonseca has led the MDS Group for 20 years, growing the company from a small broker to a giant in the Portuguese-speaking region. He has 35 years of experience in the risk and insurance industry. Fonseca is also chairman and founder of Brokerslink and a former vice-president of FERMA (The Federation of European Risk Management Associations) and a board member of CIAB (The US Council of Insurance Agents & Brokers). In 2018, he was awarded the “The Broker Leader of the Year” award by FERMA.

About MDS Group
MDS was founded in Portugal over 35 years ago. With an active presence in seven countries – Portugal, Brazil, Spain, Angola, Mozambique, Malta and Switzerland – MDS is a strong player in the European brokerage landscape and an independent leader in several markets. The company employs 900 people who manage a premium volume of 650 million EUR and generate a turnover of 80 million EUR.


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