What the change of leadership at Susep means for Brazil's insurance industry

Thursday, April 3, 2014

With the inauguration of Roberto Westenberger as the new director of Brazilian insurance regulator Susep last Friday (Mar 28), the obvious question to ask is: what will this mean for the future of the regulator and the industry itself?

The appointment of Westenberger has been warmly received by the market due to his industry experience and technical expertise.

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The new leader's background, with a PhD in actuarial science, a master's degree in applied statistics and experience in the industry, as a partner at PWC for example, contrasts with that of his predecessor, who was not as solid on technical issues, market observers told BNamericas.

Gustavo Doria Filho, head of insurance portal CQCS, highlighted at the inauguration ceremony, "the huge presence of key industry players, all showing optimism, calm and joy at the appointment of Roberto," the portal said on its website.

During his inauguration, Westenberger said he aimed to stimulate the industry to increase its contribution to Brazil's GDP, citing Chile as a reference. More interestingly, he said he aimed to give the industry more autonomy, according to CQCS.

This contrasts with reports in November of last year on online news site Brasil 247 that finance minister Guido Mantega, who has a history of intervention in other sectors of the economy, would attempt to assert control over the insurance industry with a change in Susep's leadership.

Indeed, the change in leadership coincides with a power shift in Brazilian politics as a result of the Mensalão scandal. Susep has traditionally been controlled by opposition labor party PTB, but with the potential incarceration of PTB leader Roberto Jefferson, the government saw an opportunity to exert more influence over the industry, said Brasil 247.

That being said, despite Westenberger being appointed by the finance ministry, his profile suggests he is less of a political appointment than his predecessor, and his comments above indicate less intervention in the sector going forward.

In other words, Westenberger is the finance ministry's choice, but that choice may mean less intervention in the sector.

Whether that also means more autonomy for Susep, however, remains unclear.

In February 2013 proposals were put forward by the regulator and the attorney general to transform Susep into the national insurance commission, with more independence as well as greater powers to intervene in the market, but there has been no news of developments since then.

What is more, the benefits of such a move, as far as market participants are concerned, are debatable.

"I'm not sure to what extent autonomy for Susep would change the market. Susep is reasonably independent in terms of the freedom that it has to regulate the market and change some rules and regulations," one industry insider told BNamericas.

What is clear, at least, is that players within Brazil's insurance industry are encouraged by the appointment of Westenberger as the new head of Susep.

"I can't remember a new head of Susep ever being so warmly received," said Doria at the inauguration last Friday.