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Creditor Insurance in Peru

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

Finaccord’s report titled Creditor Insurance in Peru 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 Peru. Drawing on the results of a survey of 52 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 Peru.

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 Peru 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 Peru 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 Peru.

Table Of Contents

Creditor Insurance in Peru
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 Peru 3
Rationale 3
The report tracks nearly 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
Banco de Credito del Perú is the leading bank both in terms of customer numbers and total assets… 9
… followed by BBVA Banco Continental and Scotiabank Perú 9
Institutions offering micro-loans serve large swathes of the low-income population 9
Significant merger and acquisition activity has occurred in the banking sector in recent years 10
Consumer lending market size and growth 11
Mortgage lending 11
Rapid growth in mortgage lending balances took place between 2011 and 2015… 11
Non-mortgage lending 12
… and the value of total non-mortgage consumer lending also increased albeit at a slower rate 12
Credit and other pay later cards 13
A modest rise in credit and other pay later cards occurred between 2011 and 2015 13
Creditor insurance provision rates, operating models and partnerships 15
Creditor insurance linked to mortgages 15
All mortgage lenders covered by the research offer mortgage-related creditor insurance 15
with Pacífico ranked first by weighted share of partnerships… 15
… albeit with La Positiva as the insurer with the most relationships 15
Creditor insurance linked to consumer finance 17
Creditor insurance is also a ubiquitous proposition among consumer finance firms 17
Interseguro, Pacífico and RIMAC all act as captive underwriters in this domain… 17
… albeit most lending institutions employ a single external underwriter 17
Creditor insurance linked to credit cards 19
Creditor insurance is also on offer from all Peruvian credit card issuers… 19
… with Scotiabank Perú the one entity to utilise more than one partner 19
Creditor insurance risk coverage 21
Temporary incapacity and unemployment cover are not commonly included in creditor insurance… 21
albeit they are more likely to feature as options available from the larger lending institutions 22
Performance of key creditor insurance underwriters 23
Pacífico has been a clear and consistent leader in Peruvian creditor insurance since 2010… 23
while MAPFRE increased its market share very significantly in 2014 23
Alternative distribution channels 24
Alternative distributors invariably bundle insurance cover organised by partner lending institutions 24
Creditor insurance market size, growth and forecast 24
Policies linked to mortgages account for the majority of the market value… 24
albeit those sold with point-of-sale automotive finance grew the most between 2011 and 2015 25

LIST OF GRAPHICS / TABLES

00 EXECUTIVE SUMMARY 1
Creditor insurance gross written premiums in Peru, segmented by policy and cover type, 2011, 2015 and 2019 (forecast) 2
10 INTRODUCTION 3
Banks and other lending institutions in Peru contacted by Finaccord, segmented by type 4
20 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Peru (absolute and per capita), 2011 to 2015 11
Consumer non-mortgage lending balances outstanding in Peru (absolute and per capita), 2011 to 2015 12
Credit and other pay later cards issued and per capita in Peru, 2011 to 2015 13
Key data points for the consumer lending market in Peru, 2011 to 2015 (table) 14
Provision of creditor insurance linked to mortgages in Peru, 2015: provision rate, operating models and weighted provider share of partnerships 16
Provision of creditor insurance linked to consumer finance in Peru, 2015: provision rate, operating models and weighted provider share of partnerships 18
Provision of creditor insurance linked to credit cards in Peru, 2015: provision rate, operating models and weighted provider share of partnerships 20
Unweighted risk coverage of creditor insurance policies in Peru, segmented by type of underlying product, 2015 21
Weighted risk coverage of creditor insurance policies in Peru, segmented by type of underlying product, 2015 22
Market share of top ten underwriters of creditor insurance in Peru, 2010 to 2014 23
Creditor insurance gross written premiums in Peru, segmented by policy type, 2011, 2015 and 2019 (forecast) 25
Creditor insurance gross written premiums in Peru, segmented by cover type, 2011, 2015 and 2019 (forecast) 27
Creditor insurance gross written premiums in Peru, segmented by policy and cover type, 2011 and 2015 28
Creditor insurance gross written premiums in Peru, segmented by policy and cover type, 2015 and 2019 (forecast) 29

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