Photograph: Federico Tassara, ASA
Guests at the SOA networking reception in Rio de Janeiro listened to an overview of UL’s development from the Brazilian insurance market’s perspective.
The Society of Actuaries (SOA) Latin America Committee (LAC) visited Rio de Janeiro, Brazil, in September 2018. During the weeklong visit, the committee held the first-ever SOA seminar in South America, hosted a networking reception, participated in the Brasileiro de Atuaria (IBA) Congress, met with stakeholders and held its annual committee meeting.
The “Introduction to Universal Life Seminar: The Basics and Beyond” was held on September 4 and attracted more than 70 attendees. Specialists from a variety of countries presented and discussed the characteristics of universal life insurance, which is under development in Brazil.
Jim Toole, FSA, CERA, FCA, MAAA, president of the SOA LAC, explained that the idea was to share the experience of the United States with a product that is practically unexplored in the Brazilian market. “The best way to manage risk is to learn [from] the mistakes made by others,” Toole said. “We are here to learn with you about the mistakes and successes of the United States and avoid those same mistakes in the Brazilian market.”
According to Leticia Doherty, manager at IRB-Brazil Re and director of the IBA, the main hurdle to the development of a universal life insurance product in the domestic environment is the tax issue. “The rules do not really address what matters, which is taxation,” she noted. “Who will take the first step and put the product on the market without this definition? It is absurd that this product exists in the world for more than 40 years and not in Brazil.”
Ronald Poon-Affat, FSA, FIA, MAAA, CEO of RGA and member of the SOA LAC, also presented at the seminar. He addressed key product features that vary from country to country along with transparency and flexibility. In his opinion, while it is attractive to the consumer, universal life insurance brings significant pricing risk to insurers. However, Poon-Affat noted that actuaries have been developing important solutions to mitigate these risks.
Patrick T. Leary, corporate vice president of LIMRA, who has dealt with the sale and distribution of the product in the American market, noted that universal life insurance is quite controversial. In his presentation, he listed the types of products currently marketed and what should be the approach of the agents responsible for the sale of the policies.
To close the event, Federico Tassara, portfolio manager of MetLife Chile, addressed the main lessons learned so far in four different markets: Mexico, Argentina, Chile and the United States.
Copyright © 2018 by the Society of Actuaries, Schaumburg, Illinois.