The insurance business in Latin America reached 203.354 billion dollars in 2023, an increase of 17.1%

The insurance market in Latin America expanded by 17.1% in 2023, reaching 203.354 billion dollars (approximately 186.5 billion euros at the current exchange rate), according to the latest report by MAPFRE Economics (spanish version), MAPFRE’s Research Arm, which analyzes the performance of a region where the insurance company leads the Non-Life business and is the largest multinational group.

The Latin American insurance industry “performed very positively” in 2023, according to the study by MAPFRE Economics, despite the region’s moderate economic growth of 2.2% in GDP compared to 4% the previous year. Both Life and Non-Life grew at the same rate, 17.1%.

The primary drivers of growth were Automobile insurance in Non-Life, which saw a 21.9% increase in premiums, and Fire and/or allied lines (the main type of casualty insurance), which experienced a 24% increase. In Life, savings and annuity products registered the highest growth, driven by high interest rates. As a result, individual and group Life insurance premiums increased by 17.6%.

Although part of the growth was due to the appreciation of Latin American currencies, the sector’s performance in local currency was also very positive, with real growth in nearly all the countries analyzed. Argentina (+17.2%), the Dominican Republic (+14.3%) and Mexico (+11.2%) lead premium increases in the insurance industry, while El Salvador (-9.3%) and Colombia (-4.1%) were the only ones that declined, measured in real terms.

In terms of profitability, the entire insurance sector in Latin America improved by 56.4% in 2023, reaching 15.599 billion dollars (approximately 14.335 billion euros). MAPFRE Economics emphasizes that this aspect continues to improve following the decline experienced during the pandemic in 2020 and 2021. The result of the two largest markets, Brazil and Mexico, saw significant growth, with profits of 7.319 billion dollars and 3.743 billion dollars, respectively, as well as other markets with a significant volume overall, such as Argentina, Colombia, and Peru.

Structural trends in the insurance industry

The insurance penetration index (the ratio of premiums to GDP) was 3.1% in 2023, representing an increase of 0.13 percentage points higher than the previous year and 0.43 pp higher than a decade ago. This indicator, which illustrates the weight of insurance in the overall economy, is particularly high in Puerto Rico (17.7%), as it includes health insurance for the elderly and low-income populations, which is funded by the Government. Following the Caribbean country, Chile (4.7%), Argentina (3.2%) and Colombia (3.2%) have the highest levels of insurance penetration.

In 2023, insurance density (premiums per capita) in Latin America reached 324.3 dollars (approximately 298 euros), reflecting a 16.3% increase from 2022, driven by premium growth and the appreciation of local currencies against the dollar Of this figure, the Non-Life segment accounts for 187.1 dollars per inhabitant, while the Life segment is 137.2 dollars.

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 to society. In this regard, the potential insurance market in Latin America was 504.7 billion dollars (approximately 463 billion euros), which is 2.5 times higher than the current volume. This indicates that the protection gap amounts to 301.3 billion dollars (276 billion euros), representing an 11.5% increase from the estimate for 2022. 62% of the IPG corresponds to Life insurance, which has a relative weight lower than that of more developed economies.