Best’s Market Segment Report: AM Best Upholds Consistent Prognosis for Panama’s Insurance Sector
7 Segment Display :M Best Upholds Consistent Insurance
CITY OF MEXICO—(BUSINESS WIRE)—Despite pressure from the macroeconomic environment, AM Best is maintaining its stable outlook on Panama’s insurance industry, citing its consistently profitable underwriting results with favorable prospects going forward. This information was released in a newly issued report.
The IMF estimates that Panama’s gross domestic product increased by 10.8% in 2022 and that the economy will grow by 6% in 2023.
However, Panama continues to deal with a deteriorating fiscal regime, strained public finances as a result of the government’s heavy reliance on Panama Canal revenue, and material imbalances in the pension system as a result of depleting reserves.
Disruptions in international trade, climate change shocks that affect the Panama Canal, and political unpredictability resulting from the .Elections in 2024 are one of the many issues.
The country’s insurance industry grew by 5.6% in 2022, according to AM Best’s Best’s Market Segment Report, “Market Segment Outlook:
Panama Insurance,” based on gross premiums written (GPW). The auto and health insurance markets continue to dominate the non-life insurance premium market, which makes up nearly three quarters of the total.
Line Segment Definition
The population’s increased post-pandemic awareness of the need for health coverage, the postponement of various treatments, and medical inflation have all contributed to the health sector’s over 17% growth in 2022, making it the leading sector in the domestic economy.
Panama’s automotive industry grew by a meager 2% in 2022 as a result of rising car prices brought on by inflation and a spike in claims. AM Best anticipates ongoingly unfavorable technical outcomes for
this market, but medium-term improvements might lessen the strain on the profitability of the sector as a whole.
The majority of the GPW market share is held by five companies, indicating continued concentration in Panama’s insurance sector. Smith stated,
“Underwriting is still strong, consistent with the segment’s historically strong performance, with a combined ratio below 100.” “Strict limitations on acquisition and operating costs supported underwriting performance.”
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