Fast Market Research recommends "Mexico Insurance Report Q1 2014" from Business Monitor International, now available
Boston, MA -- (SBWIRE) -- 12/26/2013 -- As of late 2013, it is clear that Mexico continues to be regarded by leading multinational insurers as a market that is too large to be ignored. Many of the positive trends that are evident elsewhere in Latin America are present in Mexico. Nevertheless, strong competitive pressures in both segments and competition from the US insurance sector continue to keep a lid on growth. Several challenges need to be addressed if Mexico's life insurance segment is to reach its full potential.
Key Insights and Key Risks
Recent developments continue to highlight both strengths and weaknesses in Mexico's insurance sector. In the non-life segment, premiums have grown at single digit rates, in real terms, in most lines other than accident and health (which expanded more rapidly), throughout 2013. But for the renewal of PEMEX's multi-year omnibus cover, non-auto related property & casualty premiums have been contracting in real terms. Life premiums have also grown at a respectable rate. For many insurers, profitability has improved as a result of tighter control of costs and losses and/or higher prices.
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We doubt that there will be radical changes in the life segment unless: a) a sustained education programme effectively promotes life insurance and long-term savings; b) shifts in the distribution of household incomes mean that there is a dramatic increase in the number of households that can afford to buy the offerings of the life insurance companies; and c) at least one of the major players develops an innovative product that captures the imagination of the masses. The rapid rise in micro-insurance in Brazil over the last 18 months or so provides an indication of what could be achieved.
In some markets, development of insurance is hampered by desperate competition for business - regardless of profitability - from large numbers of undersized companies. This is emphatically not the case in Mexico. Unlike other emerging markets, the two main segments stand out in terms of the importance of companies present; insurance firms operating in Mexico are substantial by most standards and backed by well-capitalised financial institutions. Indeed, the discipline and innovation shown by the leading providers of motor insurance are clear strengths of the overall insurance sector.
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