IPMI Inflation in Brazil
The average IPMI inflation for Brazil in 2015 was 9.2%, 1.9 points higher than the 7.3% inflation seen in 2014. While there was an increase in 2015, Brazil's inflation was the same as the global IPMI average. It would appear that over the past five years, IPMI inflation in the country has followed global IPMI trends which is interesting because the Consumer Price Inflation of 5.88% in March 2015 has been largely stable. The reason for this is because many insurers have grouped their plans together, offering the same price in numerous countries. This means premiums in Brazil will follow global IPMI inflation and will generally not be impacted directly by Brazil's Consumer Price Inflation.
The experts at Pacific Prime believe that there are four key factors that are impacting IPMI inflation in Brazil:
- A dramatic increase in the number of fraudulent claims - In speaking with insurers who have offered plans in Brazil in the past, many commented that the main reason they pulled out of the market was due to high levels of fraudulent claims found in the country.
- Strict insurance regulations - Superintendence of Private Insurance (SUSEP), the main government department responsible for private medical insurance regulation, has been implementing increasingly tough insurance regulations and stricter entrance requirements.
- Local private plans are expensive - This has in turn resulted in a demand for better value health insurance, which IPMI certainly is when compared to local cover found in Brazil.
- Providers trying to recover recent losses - Because of the increase in fraud and stricter regulations, many IPMI providers in Brazil have seen large losses in the past couple of years. This has led to cost recuperation measures of which inflated premiums make up a large part.
Comparing average inflation by insurer, you can see that premiums are spread between 7.3% and 10.1% which would explain why Brazil's IPMI inflation rate is so close to the global average.
For the coming year, Pacific Prime predicts that inflation will continue to increase, especially if fraud continues and more IPMI insurers are forced to pull out of the market.