Insurance
From The Report: Colombia 2014
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Since the 1990s Colombia’s insurance sector has grown faster than overall GDP, driven by personal lines and social security. The industry recorded 11.3% growth in assets to end 2013 with $21.4bn, up from $19.2bn in 2012, while total written premiums reached $9.45bn, an 18% increase compared to the previous year, which had ended with $8bn. Investments held by the sector also rose from $13.7bn to $15.7bn. Almost two-thirds of the assets and three-quarters of the investments are held by the life insurance division. The market, comprised of 45 insurers, includes a number of global underwriters, with the sector split evenly between domestic and foreign firms. At 2.4%, Colombia’s insurance penetration remains low even by regional standards (compared to Chile’s 5% and Panama’s 4%), suggesting significant room for organic growth in the sector.

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Overview

Regulatory reform and steady growth define the sector’s current state
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Take-off for the Colombian insurance sector began in the 1990s, when trade liberalisation and a series of financial reforms fostered competition within the sector. Among important changes brought about by Law 45 of December 1990, known as the financial reform law, were the elimination of uniformity among policies and premiums, the establishment of new solvency and minimum capital requirements, and allowing the entrance of foreign capital to the sector. In 1993 another reform engendered a significant…

Analysis

Risk takers: High retention rates in some segments provide a stronger market
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In line with growth in the insurance sector, reinsurance is becoming increasingly important and new reinsurers are entering the Colombian market. The rising demand for coverage in life and non-life segments, as well as the anticipated development of the infrastructure programme, should offer opportunities to providers. History Reinsurance in Colombia began in the 1950s after the government prohibited insurance companies from concentrating more than 20% of their capital and reserves in a single…

Analysis

Major international players are establishing a presence in the sector
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An attractive market for international underwriters, Colombia has demonstrated consistent economic growth and macroeconomic stability in the past decade, which in turn has resulted in a growing middle class and increasing employment formality. It also maintains upside potential for the development of the sector since insurance penetration is still low (2.4%) compared to other Latin American countries like Chile (5%). Colombia has the third-largest population in Latin America, behind Brazil and Mexico. Development An…