Discovering Tut The Saga Continues: Poor Or 20%
AM Best continues to have a poor assessment of Colombia’s insurance sector.
The credit rating company AM Best has declared that, given the difficult international environment and unpredictability of political developments, it is sticking with its negative assessment of Colombia’s insurance market.
Even though Colombia’s economy is doing better, there is still concern about the government’s capacity to stabilize the nation’s budgetary situation.
Furthermore, as per Best’s Market Segment Report, “Market Segment Outlook: Colombia Insurance,” Colombia is susceptible to fluctuations in global commodity prices and demand due to its reliance on the mining and hydrocarbon sectors.
The nation’s insurance market is still expanding, with COP47.3 billion in premiums in 2022 (or 20% less when the recently established Asulado Seguros de Vida S.A.
Assumes the pensioners’ obligations of AFP Protección). This represents a 34% year-over-year increase in premiums. Risks), and 19% in August 2023 when compared to the same time last year.
The study states that the social security and property/casualty business lines saw the most growth in 2022, with the auto industry accounting for the majority of that growth due to rising average premium values and an increase in the number of insured vehicles.
Discovering Tut The Saga Continues Summary
Liability, fulfilment, and fire came next. In 2022, life and health insurance premiums increased by double digits even though the Colombian peso kept losing value.
The report states that even though the insurance market continued to grow in 2023, rising 19.1% year over year, it still posted a negative technical result because the pandemic’s aftereffects and inflation were still having an impact on the claims rate.
According to AM Best, Colombia’s economy has grown significantly in recent years, mostly in the manufacturing, mining, and service sectors. The Covid-19 pandemic increased public and corporate awareness of the value of insurance coverage.
“The demand for insurance products and services is rising as a result of this increased awareness and the growth of the middle class.
Colombia’s insurance sector has significant growth potential, according to analysts, because of the country’s favorable economic climate and its aware populace.
Colombia’s GDP is predicted by AM Best to expand by 7.3% this year, then decline to 1.4%. The stability and profitability of the industry in the nation are threatened by insurance scams and false claims, so analysts also caution reinsurers to exercise caution when implementing fraud detection.
Discovering Tut The Saga Continues Question Answer
Olga Rubo, senior financial analyst at AM Best, stated that “the current interest rates reached a level higher than what was seen during the 2008 global financial crisis owing to persistent inflationary pressures.”
“Increased interest rates positively impact investment income, especially for carriers with a significant life insurance component,” the statement continues. Conversely, underwriting income and claims costs will continue to be impacted by inflationary pressures.
Although AM Best believes that Colombia’s insurance market will overcome its current difficulties, it will keep an eye on how the country’s political, economic, and regulatory environments may affect carriers.
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