The Latin American insurance market in 2023
Author: MAPFRE Economics
Summary of conclusions from the
MAPFRE Economics report
The Latin American insurance market in 2023
Madrid, Fundación MAPFRE, October 2024
The Latin American region experienced a significant economic downturn in 2023, with 2.2% growth compared to 4.0% in 2022. This happened against a backdrop of high inflation that kept monetary policy in restrictive territory across most of the region’s economies, affecting purchasing power and access to credit for governments, households, and companies, with a slowdown in domestic demand. Private consumption, while stalling, remained the main driver of regional GDP, boosting the development of insurance activity, which also benefited from a favorable interest rate environment.
Thus, in a scenario of economic downturn, the Latin American insurance market continued to demonstrate resilience, growing by 17.1% in 2023, up from 15.9% the previous year, with total premiums amounting to 203.4 billion dollars and balanced increases in both the Life and Non-Life insurance segments (see Chart 1). This strong performance boosted the Latin American insurance industry’s share in the worldwide insurance industry by 0.27 percentage points (pp) in 2023 compared to 2022, standing at 2.8% and improving in both the Life and Non-Life segments (3.0% and 2.7% respectively). However, this percentage remains low considering the size of the region’s economy, which represented 7.3% of global GDP in 2023.
Chart 1. Latin America: growth developments in the insurance market
(premiums, billions of USD; annual nominal growth rates in USD, %)
Premiums in the Life insurance segment showed significant growth of 17.1% measured in dollars (15.3% in 2022), as did Non-Life premiums, which also grew by 17.1% (compared to 16.4% in 2022). In the Life business, high interest rates provided a favorable environment for the performance of Life savings and annuity products. Meanwhile, the Non-Life insurance segment was driven particularly by Automobile and Fire insurance, which experienced a notable increase in demand, as well as Health insurance, the stability of which also underpinned the regional insurance sector’s growth.
The strong performance of Latin America’s insurance industry in 2023, combined with easing inflation in most countries, resulted in real growth in premiums across nearly all markets. Colombia and El Salvador were the only countries that saw decreases in premium income of 4.1% and 9.3%, respectively (see Chart 2).
Chart 2. Latin America: insurance market premiums and real growth
(billions of USD; real growth in local currency, %)
The insurance industry’s profitability improved markedly in 2023, with positive net results in most markets. The aggregate net result came to 15.6 billion dollars, an increase of 56.4% on the previous year, highlighting, once again, the significant growth in the results of the two largest markets, Brazil and Mexico, as well as other markets with significant weight in terms of business volume, such as Argentina, Colombia, and Peru. Insurance premium revisions made it possible to pass on, to differing extents, increases in the cost of claims and other operating expenses to the price of insurance, while interest rate hikes helped improve the financial profitability of insurance companies’ investment portfolios in some markets.
As regards structural trends, Chart 3 shows a comparison of different countries in the region based on penetration, density, and depth, which measure the level of development of the respective insurance markets.
The insurance penetration rate in Latin America (premiums/GDP) reached 3.1%, increasing by 0.13 percentage points on the previous year. This improvement was observed in both the Non-Life segment, at 1.79% (versus 1.71% the previous year), and the Life segment, which stood at 1.31%, compared to 1.26% the previous year. Puerto Rico was worth particular note for having the highest penetration rate in the region (17.7%), followed by Chile (4.7%), and Argentina and Colombia (3.2%). From a medium-term perspective (2013–2023), penetration in the region grew 0.4 pp, with accumulated growth over the decade of 0.2 pp in both the Life and Non-Life segments.
The density indicator (premiums per capita) stood at 324.30 dollars, up 16.3% on the previous year. The increase was most significant in the Non-Life segment, which saw a density of 187.10 dollars, while in Life insurance it stood at 137.20 dollars. Between 2013 and 2023, density (measured in dollars) increased by 14.5%, thanks largely to the growth seen in the past three years.
The insurance depth index (the ratio of Life insurance premiums to total premiums) stood at 42.3% in 2023, the same figure registered in 2022, as a result of the balanced growth of both segments during the year. Country by country, it can be seen that, between 2022 and 2023, Colombia, Mexico, Brazil, Argentina, Panama, Paraguay, Peru, Uruguay, and El Salvador experienced drops in the indicator. From a medium-term perspective (2013–2023), the indicator slightly improved over the last decade, with a cumulative increase of 0.2 pp in that period.
Chart 3. Latin America: penetration, density and depth indexes, 2023
(premiums/GDP, %; premiums per capita, USD; Life premiums/total premiums, %)
With regard to the Insurance Protection Gap, or IPG (the difference between insurance coverage that is economically necessary and beneficial to society, and the amount of that coverage effectively acquired), the estimate of this indicator for the Latin American insurance market in 2023 is 301.3 billion dollars, some 11.5% more than the estimate in 2022. As a structural measurement, the composition of the IPG does not show significant changes with respect to our previous report, confirming the predominance of Life insurance in its makeup. The potential insurance market in Latin America in 2023 (measured as the sum of the actual insurance market and the insurance gap in that year) was 504.7 billion dollars, meaning 2.5 times the current market in the region (see Chart 4).
Chart 4. Latin America: Insurance Protection Gap and potential market
(billions of USD)
Chart 5 presents the IPG in relative terms, i.e., as a multiple of the actual insurance market. According to this analysis, the region’s insurance gap between 2013 and 2023 showed a decreasing trend in terms of both the total market (falling from 2.0 to 1.5 times the actual market during that period) as well as the Life segment (from 3.0 to 2.2 times the market) and the Non-Life category (from 1.2 to 1.0 times). This is indicative of the medium-term trend of the Latin American region starting to match the insurance performance of developed insurance markets.
Chart 5. Latin America: IPG as a multiple of the actual market
(number of times the size of the actual insurance market)
A full analysis of the structural trends and behaviors of the region’s insurance industry can be found in the report The Latin American insurance market in 2023 (Spanish), prepared by MAPFRE Economics and available at the following link:
