“With the arrival of competition, there has been a remarkable fall of rates and premiums,” said Luiz Pestana, Vice-President at UBF Seguros, a unit of Swiss Re.

Felipe Smith, Executive Director of Tokyo Marine in Brazil, stressed that it is possible today to find in the market more reinsurance capacity in areas where it used to be scarce. But he said that the market has been less efficient when it comes to bringing innovative new products to Brazil.

Participants in the conference stressed that the market is still adjusting to a relatively new reality, not least because in 2011 the Brazilian government implemented restrictive new measures that partially reverted the liberalisation of three years before.

One of the sectors that has benefited from the new reality is surety insurance, a product much in demand thanks to the extensive infrastructure projects underway in the country.

A few years ago, there were only five surety companies operating in the Brazilian market. Today there are 28, and new players keep coming into the sector, which has grown at double digit rates of growth every year, according to João de Lima Geo Neto, the CEO of Pottencial, one of the recent entrants.

Carla Acras, Surety Manager at Chartis in Brazil, noted that the market has been able to offer much more capacity because the liberalisation of 2008 has made it possible for insurers to increasingly work with automatic reinsurance contracts, which was difficult to do in previous times.

But the liberalised market has not been enough to give a boost to some other insurance lines, such as agriculture insurance, which has a penetration level of only 0.4% of GDP in Brazil. This is well below that in countries like Argentina, Uruguay and Chile, and less than half the average ratio in Europe.

The lack of insurance protection is not a trivial matter as agribusiness is responsible for 40% of the Brazilian GDP, noted Laura Neves, Executive Director at insurer Agro Brasil.

Nonetheless, according to BB/Mapfre, an insurer, less than 10% of the cultivated area in Brazil benefits from insurance coverage.

Hurdles to the development of this market include a lack of products that respond to the particular needs of farmers located all around the vast South American country, where different regions are subject to specific sets of risks, the panelists said.

Rural producers, even those who own large tracts of land, have little knowledge about the insurance market. It is also hard to find capable brokers who are keen to visit potential clients in distant rural communities.

Experts also said that another usual complaint of market players that has not been properly addressed despite progress made in the past four years is the quality of the wording of contracts, which often lack clarity, according to insurance buyers.

Sergio Barroso de Mello, an insurance law expert at Pellon Associados, a law office, remarked that it is not unusual to see contracts that are literal translations from documents drafted abroad, and as a result have little resemblance to the realities of the Brazilian market.

Most importantly, however, the changes of the past few years have not helped Brazil shake off its reputation of having some of the most unfriendly insurance rules in the world.

For instance, large insurance buyers at multinational companies reservedly complain that IRB, the former state monopoly reinsurer, has kept too much leverage in the reinsurance market and has been all too eager to play hardball with foreign players. This has ultimately made it more difficult to manage the Brazilian parts of global insurance programmes.

Bradley Kading, President and Executive Director of the Association of Bermuda Insurers and Reinsurers (ABIR), stressed in his speech during the conference the virtues of free reinsurance markets and the benefits that access to global markets can bring to domestic insurance markets. “The freedom to compete enables the Bermuda market to offer more capacity,” he pointed out.

Mr Kading expressed the view that insurers should be able to place risks wherever they wanted. Closed markets cause the concentration of risks, a problem that can be found in Brazil, he warned.

But Leonardo Paixão, Chairman of IRB and a former insurance regulator in Brazil, was unapologetic when supporting the decision taken by the government last year to demand that insurance companies offer at least 40% of their risks to locally-based reinsurers. IRB, which is co-owned by the government and by Brazil’s biggest banks, remains by far the biggest domestic player.

He said that the opening up of the market in 2008 was more successful than regulators expected.

The original goal was to attract 20 reinsurers to Brazil in the space of five years, Mr Paixão said, but after merely three years 90 foreign companies had already set up in the country.

He also claimed that the fast liberalisation also brought undesired collateral effects that needed to be fought off.

Market insiders say that foreign insurance companies were suspected of taking advantage of the former rules to place all their risks with foreign reinsurance units that belonged to their groups, thereby simply exporting all the premium.

Furthermore, Mr Paixão voiced doubts about the wisdom of importing recipes that have proven unsuccessful in the outside world. “The harmonisation of Brazilian and international rules is the goal of the government, as long as the rules of international markets are good and efficient,” he said, noting that the crises of the past years have shown that many of them were not up to the job.

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