Friday, 17 February 2012
Latin American insurance market up 18.1% but penetration remains stunted
The insurance market continues to post solid rates of growth in Latin America, but the region still has a long way to go before it reaches the level of insurance penetration posted in the developed world, according to a recent report.
The latest issue of an annual study by Fundación Mapfre, the research arm of the Spanish insurance group, estimates that measured in euros the total premiums in Latin America increased by 18.1% in the first half of 2011.
Growth in non-life insurance was 18.9%. Particular sectors such as transportation, workplace accidents and property damage performed very well.
The most important Latin American markets all posted strong growth numbers. Non-life insurance premiums were up by 31.9% in the first half of 2011 in Argentina, 29.2% in Brazil, 18.3% in Chile, 16.3% in Colombia and 13.8% in Mexico.
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The progress is mostly due to the dynamism of local economies, especially in Brazil that accounts for more than 40% of the insurance market in the region. But the number also reflects the moderate slowdown of Latin American economies in 2011. In 2010, premium growth averaged 19.3% across the region.
Life insurance lines were the main contributors to premium growth in 2010 with a 33.6% hike, but fell back in influence last year.
Measured in local currencies, the numbers are less impressive, but still healthy, with total premiums going up by 14.2% in 2010.
Brazil constitutes by far the largest insurance market in Latin America, with premiums reaching the equivalent of €39bn by the end of 2010.
But spend on insurance per head of population remains comparatively low in the country, at no more than €270 per inhabitant. This is lower than in Chile, €363, and way down on runaway regional leaders Puerto Rico, €1958, which enjoys some of the insurance culture of the United States.
Insurance penetration in Brazil is also paltry at 3.4%, compared to 16.5% in Puerto Rico.
The market is even less developed in the other Latin American heavyweights—Argentina and Mexico—where penetration levels are 2.2% and 1.8% respectively.
Non-life premiums in Mexico fell by 0.5% in 2010, mostly because the year skipped the renewal of the mammoth insurance policy purchased by oil giant Pemex, which took place in 2009 and then again in 2011. The lack of Pemex business in the market especially affected fire insurance, civil liability and transportation lines.
In the first half of 2011, following the renewal of Pemex' policy in June, non-life insurance lines were almost 14% up on an annual basis.
Earthquake insurance premiums have shot up in Chile as the reinsurance market readjusted rates following the major tremor that hit the country in early 2010. In the course of that year, natural catastrophes caused losses of almost €50bn in Latin America, according to estimates by the United Nation's Economic Commission for Latin America and the Caribbean, ECLAC.
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