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Creditor Insurance in Colombia

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

Finaccord’s report titled Creditor Insurance in Colombia 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 Colombia. Drawing on the results of a survey of 47 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 Colombia.

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 Colombia 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 Colombia 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 Colombia.

Table Of Contents

Creditor Insurance in Colombia
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 Colombia 3
Rationale 3
The report tracks over 80 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
One credit union and two specialised lenders feature in the top ten by number of retail customers… 9
… which is led by Bancolombia 9
CorpBanca has expanded into the Colombian market through two major acquisitions 10
Consumer lending market size and growth 11
Mortgage lending 11
The Colombian mortgage market has expanded rapidly and consistently in recent years… 11
Non-mortgage lending 12
… with non-mortgage consumer lending balances outstanding also advancing strongly… 12
Credit and other pay later cards 13
… albeit at 027 cards per capita, credit card penetration remains comparatively low 13
Creditor insurance provision rates, operating models and partnerships 15
Creditor insurance linked to mortgages 15
Creditor insurance is on offer from all mortgage lenders covered by the research 15
with seven providers prominent in the weighted analysis of partnerships… 15
… led by Alfa, BNP Paribas Cardif and Bolívar 15
In addition, other captive underwriters include BBVA Seguros and Colmena… 15
… albeit AXA Colpatria is the only competitor in this sphere classifiable as a joint venture 15
Creditor insurance linked to consumer finance 17
A relationship with a single external underwriter constitutes the most popular operating model 17
Partnerships with Presta Todos, Sufi and TUYA make Sura more prominent in this market… 17
… with Solidaria also gaining visibility through additional relationships 17
In total, around 20 different underwriters compete for mandates for this type of creditor cover… 17
… and five consumer finance firms have no arrangement at all 18
Creditor insurance linked to credit cards 20
By weighted share of partnerships, Alfa and Sura are the leading underwriters in this segment 20
Three institutions employ multiple external underwriters for card-related creditor insurance 20
Creditor insurance risk coverage 22
Comprehensive insurance policies are more likely to be available from larger lending institutions… 22
… as is clear from the unweighted and weighted analyses of policy risk coverage 23
Alternative distribution channels 24
Intermediaries usually cross-sell creditor insurance packaged with the underlying lending products 24
Creditor insurance market size, growth and forecast 24
Creditor insurance policies linked to consumer finance account for the majority of the market value… 24
albeit those associated with mortgages have been delivering the most rapid growth by far 25

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Creditor insurance gross written premiums in Colombia, segmented by policy and cover type, 2011, 2015 and 2019 (forecast) (table) 2
10 INTRODUCTION 3
Banks and other lending institutions in Colombia contacted by Finaccord, segmented by type 4
20 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Colombia (absolute and per capita), 2011 to 2015 11
Consumer non-mortgage lending balances outstanding in Colombia (absolute and per capita), 2011 to 2015 12
Credit and other pay later cards issued and per capita in Colombia, 2011 to 2015 13
Key data points for the consumer lending market in Colombia, 2011 to 2015 (table) 14
Provision of creditor insurance linked to mortgages in Colombia, 2015: provision rate, operating models and weighted provider share of partnerships 16
Provision of creditor insurance linked to consumer finance in Colombia, 2015: provision rate, operating models and weighted provider share of partnerships 19
Provision of creditor insurance linked to credit cards in Colombia, 2015: provision rate, operating models and weighted provider share of partnerships 21
Unweighted risk coverage of creditor insurance policies in Colombia, segmented by type of underlying product, 2015 22
Weighted risk coverage of creditor insurance policies in Colombia, segmented by type of underlying product, 2015 23
Creditor insurance gross written premiums in Colombia, segmented by policy type, 2011, 2015 and 2019 (forecast) 25
Creditor insurance gross written premiums in Colombia, segmented by cover type, 2011, 2015 and 2019 (forecast) 27
Creditor insurance gross written premiums in Colombia, segmented by policy and cover type, 2011 and 2015 (table) 28
(forecast) 28
Creditor insurance gross written premiums in Colombia, segmented by policy and cover type, 2015 and 2019 (table) (forecast) 29

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