Talking about the insurance market in Latin America is quite a challenge because the adoption of insurance on the continent is quite low. Unlike the US or Europe, where buying an insurance policy is common and straightforward, in Latin America this is a painful process and in many cases a luxury. The insurance market represents less than 3% of the average GDP in the region, compared to more than 10% in the US and Europe; Chile and Brazil are the exceptions with slightly more than 3%. ¹ (Something important to note in understanding this region is the supremacy of car insurance: life, health, or travel insurance policies are not very attractive to the Latin American customer yet.) But change is happening. The insurance market is growing steadily in the region, and is positively changing Latin Americans’ lives.

With Internet penetration at approximately 67% and 63% for Brazil and Mexico, respectively (statisca.com), unsurprisingly, then, InsurTech adoption in the region is also very modest. Combined with low insurance penetration in the region, it is obvious that the digital revolution could only benefit the market. However, as with any market, digitization is just one consideration. Innovation is another. Although not mature and in early growth stages, Latin American InsurTech appears to be adopting a customer-centric approach.

The InsurTech Movement in Latin America

ComparaOnline was the first digital broker in Chile and in the region when it launched in 2009. The startup began as an auto insurance price comparison site but because it initially faced a high demand among those who wanted to know more about the products, it pivoted to take in advisory and selling. Today, ComparaOnline now has a presence in Colombia and Brazil. Last year, the company was selected among the top 100 leading global innovators by KPMG.

To be a relevant actor in the region, it is necessary to be in Brazil. After all, Brazil leads the Latin American insurance market and it was here, in 2011, that the first digital brokers appeared in the shape of Bidu and Minuto Seguros. Minuto Seguros, the biggest online broker in the region, decided to take the risk of approaching the insurance market differently by focusing on the relationship with the customer. The startup created its own platform, connected to several insurers, to provide products with the best prices and a digital policy-issuing process. In addition, their customer service is one of its strengths and has grown rapidly, confirming that the Brazilian consumer values advisor support in the buying cycle and will choose providers accordingly.

From 2016 onwards, some disruption emerged in the Latin American insurance market focusing on selected niches. ToGarantido, a broker of microinsurances that targets the low-income class using online and offline channels, is a great example, and also an example of insurance for inclusion that places the bet on very small prices to attract more clients. Youse is an InsurTech focused on millennials, giving their customers the ability to build and purchase their own insurance service with an app. Youse’s business goal is to attract a generation that has never been interested in buying an insurance policy. Early signs show that they are succeeding and that keeping the insurance market more transparent in services and prices does enable the insurance industry to convince and attract new clients. Youse uses no intermediaries to sell its services, although this is still under review with the Regulator. In Peru, the InsurTech wave is at an even earlier stage but the first contender in the country is Seguro Simple, a digital broker that is disrupting the Peruvian insurance market. Alongside the disruptive activities, a sign of growing maturity is the beginning of consolidation: for example, Red Segura and AsegurateFacil, the two biggest online brokers in Colombia, launched in early 2009 and in 2015, respectively, decided to merge to create Busqo, thus becoming the biggest broker online in Chile with almost 70% of the whole Colombian market.

What about the Internet of Things (IoT) in Latin America? We have two examples of IoT in insurance. In Brazil, Thinkseg is an InsurTech that has an app that follows the client’s driving to assess how a good driver he or she is and offers differentiated pricing. Thinkseg also provides a platform to small brokers who are not yet digitalized. In Argentina, SnapCar is an InsurTech that has a device in the car to collect information and measure the way in which users drive: it measures acceleration, braking, turning, speed, distance, mapping, and driving time and this information generates a score that determines the user’s savings in their premiums. We can expect to see more of these developments, not least because there are supplier partners able to support insurers, brokers, and others to develop their digital capabilities.

Segutrends.com in Mexico, VisionX in Brazil, and WAN in Uruguay offer tools to accelerate the digital transformation of the insurance sector in the region.

Other Actors Building the Latin American InsurTech Ecosystem

Local insurers also have a role to play in fostering the InsurTech ecosystem in Latin America. Certainly, although less active than the banks, the insurance companies have started to develop initiatives to work with startups, including accelerators. In Brazil, Porto Seguro created Oxigenio, an accelerator program to partner with local InsurTechs. International reinsurer Munich Re’s acceleration program MundiLab, based in Spain since 2016, is open for Latin American InsurTechs to participate and give them exposure to the European market. On the investment side, Porto Seguro, the leading insurer in Brazil, has also created Porto Capital, a venture arm to invest in startups. In Colombia, Sura Group, in partnership with Veronorte, has also created an investment arm for InsurTechs that can have synergies with Sura Group business. Collaboration is key in this ecosystem. If the insurers are focusing on customer centricity, InsurTechs can only be allies. After all, all the relationship with the customer is done through the customer services of the digital brokers.

Finally, Latin American InsurTechs need to have an eye on new technologies. The insurance market can be disrupted very easily by artificial intelligence, blockchain, machine learning, and the like. InsurTechs need to know what the future of their sector is! As a Latin American InsurTech, the challenge is to find the right balance between technology and human interaction. Despite the challenges to overcome, InsurTechs are giving a new face to the Latin American insurance market, a new face that will encourage the underinsured consumers here to place their bets on, and their trust in, the sector. The best outcome is for consumers to believe that everyone should, and can, have access to the right insurance for them, at the right price, and at the right time. This is the promise of InsurTech – insurance for everybody.