SUMMARY
Insurance penetration remains stable.
Fitch estimates that at the end of 2011, premiums for the insurance sector in Central America will be U.S. $3.275 billion, increasing by almost 7% compared to 2010. However, the penetration of the industry in the various countries would remain below that recorded in other Latin American countries (less than 5%), where only Panama will exhibit the highest level (3.5%), in line with the country's significant economic expansion.
Exploitation of new marketing channels and products will be key.
Fitch is of the opinion that insurance penetration in the region will grow if companies innovate in products and expand choices and acquisition cost. This can be done by exploiting non-traditional marketing channels, whose development is explicitly encouraged in legislation changes, and supported by the increasing openness of markets to foreign competition.
Losses limited to recent natural disasters.
Fitch believes that given the recent tropical depression (12E), which particularly affected the countries of the North Central region, the impact on the insurance will be limited, considering the low insurance penetration in the region, and appropriate levels of reinsurance and catastrophic contingency reserves accumulated by the companies. Therefore, Fitch does not show a significant deterioration in the financial profile of companies that it rates in the region.
Source: Fitch Ratings Centroamerica
More on this topic
June 2010
Fitch Ratings analyzed how insurers will cope with Pacaya Volcano and Agatha tropical storm in Guatemala, Honduras and El Salvador.
On a preliminary basis, Fitch considers that the insurance industry in Guatemala, Honduras and El Salvador will not be significantly affected by the disasters triggered by Pacaya Volcano and Agatha tropical storm.
November 2010
Fitch Ratings highlighted in their report a “relatively stable” performance of the insurance industry in 2010.
The performance of the Guatemalan insurance industry in 2010 has been relatively stable, despite the occurrence of two catastrophic events (storm "Agatha" and the eruption of the "Pacaya" volcano in late May) and the generally stagnant premiums of the main operating branch of the industry: Motor Vehicle Insurance.
March 2012
A low penetration level of insurance as related to GDP allows for sustainable growth of insurance businesses.
In the past five years, Panama has seen an explosion of commercial development and an influx of insurance companies. The country is about to remake its insurance legislation, which is also aimed at helping the country become a regional hub for insurance and reinsurance, according to Carlos Abrahams, a director at Global Intermediaries. Global is a specialized reinsurance consultancy and brokerage in Panama City, Panama.
October 2010
Fitch Ratings highlights the liquidity of the insurance market in El Salvador for the first semester.
At the end of the first half of 2010, liquidity in the Salvadoran insurance market was far superior to that of other Central American countries, and even recorded an improvement over the end of the first half of 2009.
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