According to the latest report from Mapfre Economics, premiums have registered real growth in practically all countries in the region, driven by the Auto and Property and Casualty branches in Non-Life and the Savings and Annuity products in Life.
The insurance market in Latin America expanded by 17.1% in 2023, reaching US$203,354 million (around 186,500 million euros at the current exchange rate), according to the latest report from Mapfre Economics, Mapfre's Research Service.
The Latin American insurance sector “performed very positively” in 2023, the study notes, despite the region's moderate economic growth (2.2% GDP growth compared to 4% the previous year). Both Life and Non-Life grew at the same rate: 17.1%.
The main drivers of growth in Non-Life were Automobile insurance, with a 21.9% increase in premiums, and Fire and/or allied lines (the main type of property and casualty insurance), which increased by 24%. In Life, savings and annuity products recorded the greatest growth, favoured by high interest rates. As a result, individual and group Life insurance increased their premiums by 17.6%.
Although part of the growth was due to the appreciation of Latin American currencies, the performance of the sector in local currency terms was also very positive, with real growth in almost all the countries analysed. Argentina (+17.2%), the Dominican Republic (+14.3%) and Mexico (+11.2%) led the premium increases in the insurance sector, while El Salvador (-9.3%) and Colombia (-4.1%) were the only ones to decline, measured in real terms.
As for the profitability of the insurance business, the result of the sector as a whole in Latin America improved by 56.4% in 2023, reaching US$ 15,599.4 million (around 14,335 million euros). Mapfre underlines that this aspect continues to improve, after the setback experienced with the pandemic in 2020 and 2021.
Likewise, the significant growth in the results of the two largest markets, Brazil and Mexico, which generated profits of US$ 7,319 and 3,743 million, respectively, stands out, as well as other markets with a significant volume in the group, such as Argentina, Colombia and Peru.
Structural trends in the insurance sector
The insurance penetration rate (ratio of premiums to GDP) stood at 3.1% in 2023, 0.13 percentage points higher than the previous year and 0.43 percentage points (pp) higher than a decade ago. This indicator, which illustrates the weight of insurance in the economy as a whole, is especially high in Puerto Rico (17.7%), because it includes health insurance for the elderly and low-income population, which is paid for by the Government. After the Caribbean country, Chile (4.7%), Argentina (3.2%) and Colombia (3.2%) have the highest levels of insurance penetration.
Insurance density (premiums per capita) in Latin America was $324.3 (about €298) in 2023, 16.3% more than in 2022, due to rising premiums and the appreciation of local currencies against the dollar. Of this figure, the Non-Life segment accounts for $187.1 per inhabitant, while the Life segment accounts for $137.2.
Finally, Mapfre Economics calculates the Insurance Protection Gap (IPG) based on the existing insurance volume and the coverage that would be economically necessary and beneficial for society. In this sense, the potential insurance market in Latin America was US$ 504.7 billion (about 463 billion euros), 2.5 times greater than the current volume, so the protection gap amounted to US$ 301.3 billion (276 billion euros), 11.5% more than estimated in 2022. 62% of the IPG corresponds to Life insurance, with a lower relative weight than in more developed economies.
