Key statistics:
Measuring 8.5 million square kilometres and with over 216 million people, Brazil is the world's fifth-largest country by area and the seventh most populous. Bound by the Atlantic Ocean to the east, it borders all other countries and territories in South America except Ecuador and Chile and covers roughly half of the continent's land area.
The median age of Brazil’s population is 33.5 years with the vast majority living along, or relatively near, the Atlantic east coast – with the population core in the southeast around the key cities of São Paulo and Rio de Janeiro.
Often cited as one of the most promising developing countries, Brazil has to date been unable to overcome many historical and structural issues related to education, health, housing, discrimination and corruption – and although it has a great abundance of natural resources (gold, uranium, iron and timber) and biodiversity, the country faces huge challenges in its attempts to preserve these as they decline year-on-year.
Climate change is having a significant impact on natural resources and security – including water and sanitation, food security, energy and forests – and the need to address these issues is taking on increasingly urgent importance. The Brazilian government is acutely aware of the need to mitigate these risks and over the last few years, it has developed the National Policy for Adaptation to Climate Change that aims to guide initiatives for the management and reduction of long-term climate risks including, for example, reducing greenhouse gas emissions by 43% by 2030.
Socio-economic challenges remain to be addressed
Brazil was extremely hard-hit by the global pandemic and recorded the second highest death toll worldwide. A rapid vaccine rollout since mid-2021 is supporting a return to some normality but the post-pandemic labour market recovery has been slow. Furthermore, the country continues to face social issues and has one of the highest levels of inequality in the world (in 2020, Brazil had a Gini index of 48.9 points). Even though Brazil has lifted 28 million people out of poverty in the last 15 years, approximately 10% of the population still live in poverty,
The economy, which is categorised as a middle-income developing mixed economy that relies on import substitution to achieve economic growth, is the 12th largest in the world and Brazil has developed flourishing trade relationships with more than 100 different countries.
While Brazil remains a diverse economy with strong sectors, including services (education, financial technology, travel and tourism, and franchising which contribute just under two-thirds of GDP), mining, industrial, manufacturing and agriculture (Brazil is the largest producer of coffee, sugar cane and oranges, and is one of the world’s largest producers of soya), the country is nevertheless facing economic headwinds.
After a strong recovery in 2021, GDP growth is expected to slow significantly in 2022. Rising inflation, the war in Ukraine, the fall-out from the pandemic and tighter financial conditions have eroded economic sentiment and purchasing power, which is expected to impact domestic demand.
The reported unemployment rate in Brazil dropped to 8.7% in September 2022 following a prolonged period of low growth as the country recovered from the impacts of the pandemic. However, the reality is that this figure is likely to be much higher given the number of people who are informally employed across the country.
Overcoming low insurance penetration
In 2020, insurance premiums written in Brazil accounted for only around 4% of the country's GDP and although there have been efforts to boost the microinsurance market through regulation and a number of programmes, the number of microinsurance providers has not grown significantly in recent years and the offerings remain concentrated among a few players.
While insurance penetration remains very low when compared to more developed insurance markets, the Brazilian Private Insurance Authority (SUSEP) has been taking active steps to increase insurance uptake and to facilitate the entry of new market participants.
In 2021, SUSEP issued a new microinsurance regulation which is based on a number of principles and values (which now govern microinsurance products), namely: simplicity, inclusion, customer centricity, accessibility, transparency, proportionality, sustainability, financial education and innovation. The publication of this and other regulations is part of the review and modernisation process that SUSEP has been implementing with a view to developing the insurance sector and strengthening consumer protection.
In addition, Brazil stands out in the region as one of the few countries with a regulatory sandbox, an initiative coordinated by the three financial regulators - the Central Bank of Brazil, the Securities and Exchange Commission and SUSEP – which together aim to encourage innovation projects in the financial market.
One of the barriers to developing an inclusive insurance market in Brazil is the lack of data available to better understand and analyse the market. To achieve success, it is incumbent on insurance supervisors, regulators, insurers, public-private partnerships and other development partners to work together in tandem to drive forward meaningful change.
For further insights on the inclusive insurance landscape in Brazil, dig into our latest country briefing note.
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