e-commerce boom signals massive insurance opportunity in South America
Recent research shows that Latin America is experiencing a burgeoning e-commerce market - increasing at an average of 30 percent annually – and subsequently transforming the B2B sectors, predominately air travel. However, the travel insurance market is minuscule in comparison, with an estimated paltry 10 percent of travellers buying travel cover. This leads insurance technology specialist Aquarium Software to suggest international companies could take advantage of such a gap in the South America travel insurance market – which industry commentators believe could be worth up to $2bn a year.
With an average policy price of $96 for a one-week trip, the total current Latin American market size is $192 million at only 10 per cent penetration. It is clear to see that the industry has a potential for exponential growth. “With Latin American consumers often preferring to deal with multi-nationals, this a fantastic opportunity for international insurers to seize,” said Aquarium Software Director, Mark Colonnese. “However, they must demonstrate expert local knowledge and be in tune with language and cultural differences, in order to be competitive and win trust,” he added.
Customers in the South Americas are looking for reliable, transparent insurance vendors, and many leading companies have already found success in the region, including Allianz; MAPFRE; and AXA. Allianz launched direct sales in 2012 after it began offering travel insurance in Mexico in 2008, and it has seen high rates of success, with its online channel reportedly growing by 70% annually.
“Other businesses must acknowledge the fact that Latin American consumers are becoming far more sophisticated and comfortable with the idea of e-commerce,” added Mark. “With such a low travel insurance penetration level of 10 per cent, there is huge potential for global insurers to make great leaps in the region. Our insurance technology solution is instantly configurable into Spanish, Portuguese or any other language, with the similarities in global policy admin and claims processing meaning we are watching this market with interest, ” Mark concluded.