Opinion article
Published in Edition 14
Pandemic heats up the insurance market
There is no doubt that the pandemic has had a negative, and still immeasurable, impact on both health and the economy. It has however, also resulted in new opportunities and growth for some businesses, such as Pottencial Seguradora, Brazil’s largest insurtech, that were both well placed and had a clear strategic vision.
Our robust structure, which combines the agility of a startup with the solidity of a market leader, enabled us to record the best year in our history despite the pandemic.
We maintained our leadership in Surety Bonds for the fourth consecutive year, with a market share of over 18%, and a 30.6% growth in net income, jumping from R$84m in 2019 to R$110m in 2020. We have also strengthened our pioneering position in the market, making us the first Brazilian insurance company to perform the electronic registration of Surety Bond policies with the Operations Registration System (SROs) at B3, one of the companies approved to operate this tool.
These achievements reflect our commitment towards our customers, based on an increasingly flexible and simple service. The existence of our highly competent and dedicated team was also instrumental in ensuring that we could thrive even under such adverse conditions.
RECORD GROWTH FOR POTTENCIAL ALUGUEL (LEASE BOND)
The growth in Pottencial Aluguel (Lease Bond) last year is also worth highlighting, with an increase of 296% compared to the previous year. This type of insurance replaces other guarantees for property leases and protects the owner in the event of non-payment of rents and/or charges by the tenant. Amidst an unprecedented economic crisis, the Lease Bond represents everything a lessor is looking for, namely security, stability, and peace of mind.
The economic impact of Covid-19 has also caused companies to seek recovery of deposits made in lawsuits, also known as Court Bonds, to support their cash flow. As a result, we saw a soaring demand for Court Bonds – Appeal Bonds (replacement type). The company recorded a policy issuance volume 200% higher than in 2019. This type of insurance allows court deposits to be replaced by a policy, providing an important impetus to businesses, especially to small and medium-sized companies at this delicate time in the economy.
INVESTMENTS IN TECHNOLOGY
To make a difference in a market dominated by large national and multinational companies, we understand the importance of making constant investments in technology, simplifying connections with brokers and partners, and providing flexibility and quality in the service to the insured. Today, it is optimism that is driving Pottencial forwards. 2021 is looking very promising for the company, with plans to launch two new products in the coming months for individuals and legal entities, as part of our portfolio diversification strategy: Businessowners and Homeowners insurance. Pottencial also plans to open three new offices in the Brazilian capital cities and increase the number of employees by at least 50%.
Our position as Brazil's largest insurtech enabled us to record the best year in our history even in an atypical scenario.
THE INSURANCE MARKET IN BRAZIL
We believe that this time of total economic instability and uncertainty over the future has helped Brazilians embrace the importance of insurance to help mitigate the risks they face and prevent losses. The national market has seen an irreversible move towards adopting an insurance culture, one that is already consolidated in more advanced countries, where the recurrence of natural disasters, among other factors, contributes to increased demand.
The product areas expected to see the greatest demand are those related to civil construction. Although the sector was strongly impacted last year, projections for the coming years show it gaining momentum, motivated in particular by advances in regulatory frameworks – such as sanitation and electric power – and the new Bidding Law, which will boost demand for infrastructure-related insurance. We believe there will be a rise in demand for some products intended for construction companies, such as the Bid Bonds and Performance Bonds.
After the pandemic, the market will be different, as will consumer behaviour. The sector tends to get stronger with new customers’ demands, but it is up to insurance companies to adapt to this scenario. Investing in technology, optimising, and simplifying processes is, for Pottencial, the smartest way to attract new customers and consequently take an even larger market share in a highly competitive but equally promising market.
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