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Creditor Insurance in Chile

  • January 2016
  • -
  • Finaccord
  • -
  • 29 pages

Finaccord’s report titled Creditor Insurance in Chile offers uniquely detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, as acquired by individual borrowers in Chile. Drawing on the results of a survey of 65 lenders, the study analyses the distribution of creditor insurance by banks and other lending institutions, how provision rates vary for different lending products, operating models used for arranging creditor insurance, and distribution partnerships weighted by the size of distributors. The PartnerBASE™ dataset that accompanies the report details all creditor insurance distribution deals traced by Finaccord. In short, this study will provide you with the definitive guide to current and future opportunities in creditor insurance in Chile.

Key features of this study plus the PartnerBASE™ dataset and market data annexe that accompany it include:

- quantification of creditor insurance market size and growth with a timeline from 2011 to 2015 and onwards to 2019: how much is this market worth in Chile and what is its future development potential?

- segmentation of this market both by underlying loan type (differentiating between mortgages, point-of-sale automotive finance, other consumer finance and credit card loans) and by type of cover (differentiating between cover for death / permanent disability and temporary incapacity / unemployment);

- consideration of operating models used for creditor insurance: how advanced is the use of captive and joint venture underwriters by lending institutions in Chile and what are the opportunities for external underwriters?

- calculation of weighted provider share of partnerships: Finaccord’s unique quantitative analysis helps to identify which underwriters of creditor insurance hold the relationships that offer the most potential;

- investigation into alternative distribution channels for selling creditor insurance: a number of factors could increase the potential for entities other than the lending institutions themselves to sell creditor insurance in Chile.

Table Of Contents

Creditor Insurance in Chile
TABLE OF CONTENTS
00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
This report provides a comprehensive analysis of loan-related insurance policies in Chile 3
Rationale 3
The report tracks over 100 separate initiatives for marketing creditor insurance through lending institutions 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 5
Creditor insurance 5
Mortgages, consumer finance and credit cards 5
Weighted provider share of partnerships 5
Operating models 6
Abbreviations and exchange rates 7
PartnerBASE and market data annexe 7
Finaccord 7
20 MARKET ANALYSIS 9
Banks and other lending institutions covered 9
Introduction to the banking sector 9
Chile's retail lending market is populated by a variety of different types of institution… 9
… including a significant number of credit unions and specialised lenders 9
Santander is the market leader in terms of total loans outstanding (and total deposits) 10
Consumer lending market size and growth 11
Mortgage lending 11
The period from 2011 to 2015 witnessed significant growth in mortgage lending balances 11
Non-mortgage lending 12
… with total non-mortgage consumer lending balances also moving up over the same time frame 12
Credit and other pay later cards 13
Credit and other pay later cards in circulation fell back between 2011 and 2015 13
… as a result of non-bank card issuers pruning cards that were not being used 13
Creditor insurance provision rates, operating models and partnerships 16
Creditor insurance linked to mortgages 16
All mortgage lenders covered by the research offer mortgage-related creditor insurance 16
with BNP Paribas Cardif comfortably the leader by weighted share of partnerships 16
Several lending institutions utilise underwriters classifiable as joint ventures… 16
while BBVA and Banco BICE both maintain captives in this arena 16
Different types of creditor risk are sometimes dealt with by different underwriters 16
Creditor insurance linked to consumer finance 19
Virtually all non-mortgage lenders are also distributors of creditor insurance 19
… with use of a single external underwriter the operating model used by most 19
BNP Paribas Cardif, Banchile Seguros and BCI Seguros hold the most partnerships in this arena 19
Creditor insurance linked to credit cards 22
Only two card issuers in Chile lack an arrangement for related creditor insurance 22
with BNP Paribas Cardif and MetLife the leaders by weighted share of partnerships 22
ACE Seguros and BCI Seguros each claim four relationships in this sector 22
Creditor insurance risk coverage 24
Over 50% of policies on offer can be classified as comprehensive ones… 24
and these are generally more likely to be available from larger lending institutions 25
Performance of key creditor insurance underwriters 26
The leadership of BNP Paribas Cardif is confirmed by the latest market share data… 26
with this insurer having overtaken Banchile Seguros in 2014 26
Alternative distribution channels 27
Creditor insurance bundled with loans can also be obtained from two other main sources 27
Creditor insurance market size, growth and forecast 27
Mortgage-related creditor insurance accounts for the highest share of the total market value… 27
and their value has also grown most rapidly in recent years 28

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Creditor insurance gross written premiums in Chile, segmented by policy and cover type, 2011, 2015 and 2019 (forecast) (table) 2
10 INTRODUCTION 3
Banks and other lending institutions in Chile contacted by Finaccord, segmented by type 4
20 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Chile (absolute and per capita), 2011 to 2015 11
Consumer non-mortgage lending balances outstanding in Chile (absolute and per capita), 2011 to 201512
Credit and other pay later cards issued and per capita in Chile, 2011 to 2015 14
Key data points for the consumer lending market in Chile, 2011 to 2015 (table) 15
Provision of creditor insurance linked to mortgages in Chile, 2015: provision rate, operating models and weighted provider share of partnerships 18
Provision of creditor insurance linked to consumer finance in Chile, 2015: provision rate, operating models and weighted provider share of partnerships 21
Provision of creditor insurance linked to credit cards in Chile, 2015: provision rate, operating models and weighted provider share of partnerships 23
Unweighted risk coverage of creditor insurance policies in Chile, segmented by type of underlying product, 2015 24
Weighted risk coverage of creditor insurance policies in Chile, segmented by type of underlying product, 2015 25
Market share of top 15 underwriters of creditor insurance in Chile, 2010 to 2014 (table) 27
Creditor insurance gross written premiums in Chile, segmented by policy type, 2011, 2015 and 2019 (forecast) 28
Creditor insurance gross written premiums in Chile, segmented by cover type, 2011, 2015 and 2019 (forecast) 29
Creditor insurance gross written premiums in Chile, segmented by policy and cover type, 2011 and 2015 (table) 29
Creditor insurance gross written premiums in Chile, segmented by policy and cover type, 2019 (forecast) (table) 29

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