The outlook is bright for the region's insurance industry. Brazil, Mexico, Colombia and Chile will grow faster, and a new wave of mergers and acquisitions is heading to Latin America.
After mixed, yet reasonable growth last year, Latin America's insurance sector will continue to expand in the short to medium term, executives and analysts say. The trends are favorable, including the increase in consumers' purchasing power, changes in consumption habits, and easier access to the supply of products offered by the industry. Some factors may conspire against a favorable performance, including a deterioration of the global economy, yet the majority of those interviewed by Latin Trade for this report voiced optimism.
Jorge Luis Cazar, regional manager for ACE Group, told Latin Trade from Santiago de Chile that the potential for growth is important, given that insurance penetration in Latin America barely reaches 1.5 percent of gross domestic product. "While there are some risks that the region is facing, it is realistic to expect the insurance market to grow in the range of 3 percent to 4 percent per year in the next three years," Cazar added.
Michael Raney, chief executive of Zurich Latin America, pointed out that "the increase of insurance penetration in the region will remain supported principally by the phenomenon of the expansion of the middle class, to the extent that the regional GDP is growing and there is an ongoing gradual cultural change in favor of increasing consciousness of the importance of insurance."
In regards to specific business lines, the majority of those consulted expect continued dynamism of automotive-related products in tandem with growth in the number of cars in the region; surety for concessions and infrastructure mega-projects; and those associated with increased social-security coverage, including health, life, and professional hazards.
In contrast to last year, faster world trade growth is expected to support the recovery of trade finance-related insurance. The expansion of multilatinas could become yet another driving force. According to ACE's Cazar, the multilatinas "grow every year, not only in the region--basically Chilean, Colombian and Peruvian companies --but also in other continents, mainly Brazilian, Mexican and Argentine companies," thus generating opportunities for new products and services. Cazar added that seizing this and other opportunities hinge on the execution of plans...