MAPFRE Economic Research has prepared a report related to the insurance penetration index entitled “Areas for improvement in expanding insurance in Latin America”.
The insurance penetration index, which represents the weight of insurance premiums relative to a country’s GDP, comes in at above 7 percent in advanced economies such as the United States or the large European countries, but is significantly lower in Latin America at below 3 percent.
This report, prepared by MAPFRE Economic Research at the request of the Interamerican Federation of Insurance Companies (FIDES) was presented at the biennial FIDES convention, held this week in El Salvador. It provides an overview of areas for improvement to be considered when designing public policies aimed at increasing insurance penetration in economies in the region.
The conceptual framework underpinning this work focuses on analyzing the main factors capable of boosting penetration levels both from both a supply and demand perspective.
On the supply side, improving market access and the design and implementation of more risk-oriented regulatory frameworks which take account of the conditions and degree of development of each market, are key factors which can contribute to increasing insurance penetration in the region. According to MAPFRE Economic Research’s analysis, Mexico, Brazil, Colombia, Puerto Rico, Chile and Peru have the most advanced regulatory regimes in this regard.
Another key aspect involves achieving greater efficiency in terms of expenses, facilitating balanced growth across different distribution channels and the potential for sector level collaboration to share data and identify synergies as part of the necessary digitalization of insurance companies.
On the demand side, structural factors such as dynamic economic growth alongside improvements in income distribution, education and financial inclusion would have a positive impact on expanding insurance in the region.
Click here to read the fall report
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