By Ricardo Sant’Ana, Director Employee Benefits & COO Lockton Brasil 

The main changes in the Brazilian insurance market are taking place in the area of employee benefits, particularly life insurance and health insurance. The impact on rates depends on the type of activity and risk exposure, based on claims history. The COVID-19 experience is now being included in this exercise.

Claims in health insurance have recently been falling because policyholders are afraid of catching COVID-19 through face-to-face consultations, examinations or therapies. We are likely to see a spike in health insurance claims after the pandemic as policyholders make up for the backlog and claims may become more expensive for those that have not received the appropriate treatment during the lockdown.

It is worth noting that the revenues of hospitals and clinics decreased by around 30% during the pandemic. As a result, we will audit healthcare bills more carefully to make sure that they are correct and that patients are not kept in hospitals longer than necessary. Another point worth noting is unemployment rate in Brazil of around 13% currently, which is likely to cause higher claims levels in the short term. 

The main drivers of change in employee benefits in Brazil include: 
•    Reduction in the utilisation of health insurance due to the fear of contracting COVID-19.
•    Possible fraud in hospitals and clinics due to lower revenues.
•    Important treatments like cancer are being delayed and may create higher future claims.
•    Unemployment rate

Due to the unemployment rate increase as a result of the lockdown and the freezing of many economic activities we expect a 10% reduction in the number of individuals with employee benefits. This will affect claims in the short term (run-off/incurred but not reported) in health plans. 

A normalisation will only take place if an effective vaccine is found which will then allow for an economic revival and employment growth. 

Another issue is that in Brazil all medical costs (also related to COVID-19) in the public sector are passed on to health insurance policies in form of claims. It may take up to 12 months for these claims to arrive. 

Estimates of potential costs:

•    Hospitalisation cost without intensive care unit (ICU): BRL 9,000 (USD 1,700) 
•    Hospitalisation cost with ICU: BRL 45,500 (USD 8,300)

For further information, please contact Ricardo Sant’Ana under: