The curious case of Panama

• DOI: http://doi.org/10.1111/rmir.12153
• Author: Pablo J. Gutierrez Fernandez
• Date: 01 September 2020
• Published date: 01 September 2020

Risk Manag Insur Rev. 2020;23:225–227. wileyonlinelibrary.com/journal/rmir

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225

Received: 7 May 2020

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Accepted: 4 August 2020

DOI: 10.1111/rmir.12153

INVITED ARTICLE

The curious case of Panama

Pablo J. Gutierrez Fernandez III CPCU

Marbella Tower II, Panama, Panama

Correspondence

Pablo J. Gutierrez Fernandez, Marbella

Tower II, Panama, Panama.

Email: pablojosegf@gmail.com

Abstract

A small country in Central America offers some in-

teresting ideas on how the insurance industry can

handle the COVID‐19 pandemic and crisis.

The COVID‐19 pandemic is a global catastrophe. Governments across the globe are implementing

both old and innovative policies and measures to cope with the virus and its impact on the economy.

Insurance, which serves as the backbone of the world economy, is now, more than ever, a necessary

instrument in dealing with the crisis—both as an economic instrument and a social one.

Much has been written on the implications the current crisis is having on the largest insurance

markets, such as the United States and European markets.

1

From regulatory pressure to expand

coverage through coercive mechanisms to lawsuits regarding the scope of coverage of certain policies,

the literature is rather robust. However, one small and often neglected insurance market might have

something to teach the rest of the world, which is the fact that the insurance industry can voluntarily

fulfill its social function by supporting insureds during dark and perilous times.

Panama has a thriving insurance market relative to that of its Latin American peers. With

an 8‐year compound annual growth rate (CAGR) of 5%, a penetration rate of 2.35%, and a

premium density of $369.10 in 2019, the country's insurance market stands out.

2

,

3

,

4

Not only are

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© 2020 The American Risk and Insurance Association

1

For more on this: https://uk.reuters.com/article/us-otc-covid19/covid-19-response-could-bankrupt-the-insurance-

industry-insurance-defense-lawyer-idUKKCN21W2YE,https://www.insurancejournal.com/news/west/2020/04/13/

564520.htm, and https://www.propertycasualty360.com/2020/05/14/worlds-insurers-face-203-billion-in-losses-from-

the-coronavirus/?kw=World%27s%20insurers%20face%20%24203%20billion%20in%20losses%20from%20the%

20coronavirus&utm_source=email&utm_medium=enl&utm_campaign=newsflash&utm_content=20200514&utm_

term=pc360#

2

Panama uses the US dollar as legal tender.

3

Calculations made by the author based on data provided by the Superintendencia de Seguros y Reaseguros de Panamá

(SRRP) and the Instituto Nacional de Estadíctica y Censo (INEC); https://superseguros.gob.pa/ and https://inec.gob.pa/

Default.aspx

4

For a more in‐depth discussion and analysis of the Latin American insurance market, have a look at: https://www.

mapfreglobalrisks.com/gerencia-riesgos-seguros/wp-content/uploads/2019/10/MAguilera_Presentacion_Informe_

LATAM_26.09.2019_REDUCIDO.pdf—its worth noting that Panama's premium density was 52% higher than the

LATAM average back in 2018, as well as being #3 on the technical result ranking. Although the penetration rate falls

below the LATAM average (2.9%), it serves as an indicator of the opportunity companies have to expand their reach and

keep growing their premium portfolio.