Howden Re has published the fourth edition of its “Brazil and Global Climate Impacts” report, which analyzes the country’s recent weather patterns and provides forecasts for the upcoming quarter, aimed at supporting the insurance and reinsurance sectors’ understanding of emerging environmental risks.
The report notes that economic growth across Latin America is helping expand local insurance markets. In Brazil, the insurance sector has seen growing demand since the reinsurance market liberalized in 2007.
This development is driving a greater need for advanced data and analytics to improve risk assessment and coverage design. Howden Re highlighted the importance of climate modeling in addressing these challenges.
Antonio Jorge Da Mota Rodrigues, head of Howden Re Brazil, said the market is reaching a turning point, as expanded reinsurance capacity intersects with evolving environmental risk.
Brazil’s reinsurance landscape has evolved significantly since the dissolution of the state-controlled Instituto de Resseguros do Brasil (IRB) monopoly in 2008. The opening of the market to both domestic and international reinsurers encouraged greater competition and diversification.
In the first 10 months of 2024, insurers in Brazil ceded R$22.3 billion in premiums, a 5% increase compared to the same period in 2023. October 2024 alone accounted for R$2.5 billion, up 20.9% year-over-year, signaling a growing reliance on reinsurance to manage risk portfolios.
The credit and collateral and damages and liabilities segments posted notable growth, increasing by 30.4% and 29.2%, respectively, in October 2024 compared to the previous year. Despite this growth, the sector continues to face structural challenges.
AM Best has maintained a negative outlook on Brazil’s reinsurance market, citing restrictions on foreign asset holdings that limit global expansion by domestic reinsurers. Additionally, regulatory constraints and broader fiscal pressures contribute to a cautious sentiment surrounding the market’s medium-term potential.
The report forecasts continued weather variability across Brazil, with potential implications for agriculture, energy systems, and public health. The National Oceanic and Atmospheric Administration (NOAA) has projected a transition from a weak La Niña phase to a neutral pattern beginning in March.
Rainfall in April is expected to remain below average in central and southwestern regions, raising the likelihood of soil moisture deficits during the conclusion of the first crop harvest. In contrast, projections indicate above-average precipitation in May and June in Rio Grande do Sul and the Northeast, which may offer some relief to drought-affected areas.
Temperature anomalies are forecast to continue, with highs in western Mato Grosso do Sul and Rio Grande do Sul expected to exceed seasonal norms by 2.4–3.0°C. These conditions may increase strain on local infrastructure and public health services.
With Brazil set to host COP30, the report suggests that insurers and reinsurers are preparing for a market shaped by secondary perils and regional weather extremes. Events such as flash floods and drought-driven soil degradation are testing the industry's ability to adapt coverage models.
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