The insurance industry in Latin America experienced double-digit growth since 2023, successfully navigating a challenging landscape marked by high inflation and other structural challenges.
According to a report by MAPFRE Economics, the strong performance of the sector allowed it to increase its global market share by 0.27 percentage points. In numerical terms, the industry grew by 17.1%, reaching USD 203.35 billion, a positive outcome for a year characterized by “complex scenarios.”
Local currencies from countries like Mexico and Brazil played a crucial role in the market. Their appreciation and stability enabled real gains when measured in dollars.
Despite a general economic slowdown, the region’s major economies performed better than expected. Monetary policies kept interest rates above inflation, benefiting the dynamism of various segments.
Additionally, the underdeveloped nature of the insurance market presents a greater potential for growth, showing higher elasticity in response to GDP variations compared to more mature markets.
From Madrid, Ricardo González García, Director of Analysis, Sector Studies, and Regulation at MAPFRE Economics, highlights private consumption as a key factor.
He notes that while private consumption continues to decelerate, it remains a significant driver of regional GDP. “Stronger labor markets also played a role,” he adds.
Contrary to popular belief, high interest rates can benefit business lines such as savings-linked life insurance. “It’s good for the profitability of insurance entities because investment portfolios yield more,” he explains.
Economic and social development propels industry progress. Individuals with higher per capita incomes feel a greater need for insurance, which in turn stimulates insurance activity and feeds back into the economy.
In Guatemala, insurance premiums reached USD 1.438 billion, reflecting a nominal increase of 13% and a real increase of 6.4%. The growth rate surpassed that of 2022.
Forecasts indicate that the country will grow at a rate of 3.5% this year, and potentially 3.6% next year, suggesting optimistic prospects for growth beyond 2024, according to González García.
The most significant insurance line is Non-Life Insurance, particularly Health (USD 376 million) and Automobiles (USD 253 million). The latter saw a notable 15.2% nominal growth in premium volume.
“However, this trend was not exclusive to Guatemala. We attribute the growth to private consumption, which always supports the auto business,” the expert mentions. Insurance companies are making concerted efforts to promote a greater insurance culture.
Despite this progress, Guatemala’s insurance penetration relative to GDP remains one of the lowest in the region, with average growth.
In terms of competition, the most concentrated insurance markets were Uruguay, Costa Rica, and Nicaragua, with indicators exceeding the 1,800-point threshold according to the Herfindahl index, which measures market concentration levels and changes.
Meanwhile, Puerto Rico’s insurance market continues to show the highest penetration rates, largely due to higher per capita income influenced by U.S. policies.
“There is an opportunity to include regulations within public policies that help increase insurance penetration. While not mandatory, tax incentives can significantly benefit the industry,” he adds.
In conclusion, the underdeveloped state of the Latin American insurance market presents ample room for growth. Better results will depend on increasing the per capita income of its citizens. “It’s not an easy task, but addressing structural issues could lead to significant growth,” González García concludes.
This article has been translated after first appearing in Republica