MEXICO CITY–(BUSINESS WIRE)–Insurance companies in Colombia have maintained strong capital
positions, and the market as a whole shows room for growth in a
favorable economic climate backed by adequate regulation, and these
factors are supporting AM Best’s stable market segment outlook on
the industry.
A new Best’s Market Segment Report, titled, “Market Segment
Outlook: Colombia Insurance,” states that Colombia’s insurance market
has demonstrated solid operating performance with diversified
distribution channels amid economic conditions that have improved.
However, these factors have not resulted in larger insurance
penetration. The country’s insurance penetration rate had been growing
since 2014, but it declined to 2.8% year over year in 2018. In addition,
the insurance market has not been able to follow economic trends
consistently. Premium growth expanded 1.6% in real terms, significantly
lower than the 4.5% seen in 2017, mainly due to lower premium volumes of
provisional, health and personal accident insurance coverages.
However, the industry’s combined ratio improved in 2018, to 104.5 from
106.2 in 2017. The life insurance segment accounts for 51% of total
gross premiums written, and in most markets with a heavy component of
life insurance, the combined ratio tends to be above 100. In Colombia,
the life segment’s operating ratio is 59%, taking into account the
results generated by investment income. This result is driven by lower
benefits-paid and investment income ratios compared with 2017. Growth in
the life segment also has resulted from better credit conditions, as
many of these policies are related to mortgage loans and consumer loans
originated within the financial sector.
Profitability was strong in 2018, and insurers generated a return on
equity of 13.2%. For non-life insurers, compulsory automobile insurance
benefited from the increase in minimum wage, as well as from adjustments
to its price and the increase of new car sales during 2018.
Overall, with economic growth predicted for 2019, along with better
trade terms and a reduced commercial deficit, AM Best expects the
Colombia’s insurance market to build a larger business base while
improving technical results and maintaining strong risk-adjusted
capitalization.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=285284.
AM Best will be hosting a networking event with a brief Latin America
market overview to mark the five-year anniversary of its Mexico-based
subsidiary at Habita Hotel in Mexico City, on Thursday, May 9, 2019,
beginning at 6 p.m. CDT. There is no charge for this event. To attend or
for more information, please visit the event
registration page or email [email protected].
A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.
Contacts
Elí Sánchez
Associate Director
52 55 1102
2720, ext. 108
[email protected]
Christopher Sharkey
Manager, Public Relations
+1
908 439 2200, ext. 5159
[email protected]
Jim Peavy
Director, Public Relations
+1 908
439 2200, ext. 5644
[email protected]
