The past two years have seen the Peruvian insurance sector experience its fair share of volatility. After registering gross premium growth of 17.8% and 24.3% in 2014 and 2015, respectively, 2016 saw the industry contract by around 3.5%, according to a report issued by BMI Research. The sector’s poor performance was due mainly to a reduction in investment across the economy, damage caused by the El Niño weather pattern, weaker private consumption and a new regulation that allowed up to 95% of pension funds to be withdrawn.

However, the industry appears to have rebounded somewhat, experiencing moderate growth in 2017 encouraged by rising household income and personal savings, continuing growth in the individual life segment, and increasing knowledge and popularity of products among the general public.

Regulation History

Insurance provision in Peru was a government-run industry until 1993, when the sector underwent a period of liberalisation. The General Banking and Insurance Law, issued in October of that year, permitted individuals to purchase insurance from foreign companies, allowed providers to set rates and ended the reinsurance monopoly. This not only created a competitive market framework, but also opened the industry up to foreign investment. To ensure an investor-friendly environment, December 1996 saw the creation of the first regulatory provisions for insurance activity. These included solvency requirements and further controls aimed at to coordinating insurance with both the finance and health care sectors.

Under strict supervision and coordination from the Superintendency of Banking and Insurance (Superintendencia de Banca y Seguros, SBS), which is the agency tasked with overseeing and regulating financial entities, insurance companies and pension funds, the sector has gradually developed in accordance with international standards and best practices. The SBS operates through an exigent supervisory scheme based on the identification, evaluation and control of the risks faced by insurance companies, with a particular emphasis on the analysis of insurance, investment, reinsurance, and operational and money-laundering risk.


According to a report issued by credit ratings agency Moody’s, total gross premium grew by 1% in 2017 to hit PEN11.3bn ($3.5bn). Life insurance and pensions comprised 58% of total premiums, while general non-life insurance accounted for 42%. As a share of the entire sector, pensions continue to be the largest segment, with 21% of total direct gross premiums. This is followed by the automobile segment, with 16%.

While estimates for 2018 vary, according to figures from the SBS, as of the first half of 2018 total premium reached $1.86m. According to the Peruvian Association of Insurance Companies (Asociación Peruana de Empresas de Seguros, APESEG), as a result of the growing middle class, rising income is expected to drive market expansion, resulting in revenue growth of between 3% and 3.5% in 2018.

While the overall growth rate of the sector slowed in 2016 and 2017, certain segments still performed well. Personal lines of insurance, such as life, personal accident and vehicle coverage, maintained a strong presence, prompted by higher incomes and savings. The automotive segment accounted for 28% of all non-life insurance policies in 2017. This was followed by property, with 26%, health (14%), transportation (7%) and personal accident (4%).

Recognising this potential, insurance companies are pushing to offer new products and grow the sector. Javier Nagamine, the head of the Department of Analysis of Insurance and Pension Systems at the SBS, and Jorge Frisancho, senior analyst of insurance and pension systems at the SBS, told OBG there was only moderate growth in 2017; however, insurance companies are innovating and offering alternative products that have compensated for the decline in income from pension accounts and the economic slowdown. The rising popularity of long-term life insurance policies has also contributed to the sector, achieving growth of 0.6%. They added that in 2018 private income is expected to rise, and companies will continue to develop new products aimed at stimulating demand for their products. Life insurance is also expected to grow further.

Major Players

According to APESEG, 20 companies were operating in the Peruvian insurance system as of the first quarter of 2018. The industry is characterised by high levels of concentration, with the two dominant firms in the market being Rimac Seguros, which comprises nearly 30% of the net premium volume, and Pacífico Seguros, with around 26.6%, according to SBS reports. The third-largest company is Mapfre Perú, with 9.85%.

The six primary life insurance providers are Crecer Seguros, La Positiva Vida, Mapfre Perú Vida, Ohio National Vida, Rigel and Vida Cámara. The top-performing non-life providers include eight companies: HDI Seguros, Secrex, La Positiva, Mapfre Perú, Avla Perú, Insur, Coface Seguros and Liberty Seguros.

Also included are six primary companies classified under the mixed category of insurance. Top-performing firms are Interseguro, Rimac Seguros, Pací fico Seguros, Chubb Seguros, Protecta and Cardif.

Penetration Challenge

In part, Peru’s comparatively low level of insurance penetration reflects the fact that the country has a very high rate of economic informality, with 72% of the workforce outside the traditional tax and benefits system in 2016. By the end of 2017, the sector’s penetration rate stood at 1.63% of GDP, down from 1.71% in 2016 and 1.9% in 2015, according to APESEG. This explains to some extent why the average per capita insurance premium in Peru is very low, coming in at between $105 and $110. While this is a 0.6% increase from 2016, the figure is still lower than 2015.

However, low penetration rates also indicate notable room to grow the sector, particularly outside Lima. “Insurance penetration in Lima is relatively high, with almost 45% of the population having some kind of insurance,” Marcel Fort, general manager of Grupo Pichincha in Peru, told local media in June 2017. “However, if we go to the smaller provinces, then we see figures below 1.5%, which is very low.” Fort emphasised the need to increase sales and penetration of mass insurance via the establishment of defined channels – a process where technology can play a key role (see Global Perspective). EL NIÑO: While offering scope for improvement, the overall lack of an insurance culture ultimately means there is a limited level of coverage for losses that can be caused by catastrophic events. This is especially problematic in Peru, which has a comparatively high level of exposure to natural disasters, including earthquakes and extreme weather, such as heavy rains, floods and mudslides. In March 2017 storms caused by El Niño caused serious damage across the centre and north of the country. By the end of that month a total of 94 people had died, with an estimated 700,000 left homeless in 12 of Peru’s 25 regions. Reports said that there had been widespread financial losses, with small and medium-sized enterprises (SMEs) and agriculture hit hardest.

Company Losses

The SBS reported that as of September 2017 estimated losses had reached a total of $613m, and claims made to insurance companies for damages caused by El Niño impacted profits. Rimac Seguros and Mapfre Perú recorded the largest claims, which reached $271m and $146m, respectively. This was primarily due to severe damage to motorways and large industries, with the companies registering a combined 14,170 claims. La Positiva incurred the largest number of claims, with 7793, which corresponded mainly to damage caused by rains and floods.

The Lima region was the most affected area, with estimated payouts of $216m as of September 2017. This was explained both by a higher concentration of insured assets and by the severity with which the region was affected. Other strongly affected regions were Piura, La Libertad, Áncash and Lambayeque, which registered claims in the amounts of $163m, $135m, $38m and $36m, respectively. The policies that registered the highest loss were those which covered fire damage, with total payouts reaching $530m as of September 2017. Contractors and multi-insurers also reported a high loss ratio, with respective claims of $45m and $23m. This was followed by losses in agricultural ($4.36m), automobiles ($3.46m) and animals ($3.23m).

Despite the high number of claims, however, due to the low insurance penetration rate, just 5% of the areas damaged that year were covered under a policy, according to APESEG. This situation has not only slowed economic recovery, but also put added burdens on state coffers, with the central government budget of $3.1bn for reconstruction covering only 40% of the damages (see Construction & Real Estate chapter).

Untapped Segment

Contributing to the low level of coverage at the corporate level is that view that policies are predominantly tailored to large organisations. Only a small fraction of SMEs in Peru have any form of insurance, despite the fact that this market grows by 10% per year. According to APESEG, one of the key factors in encouraging SMEs to purchase coverage will be to better inform them of products on offer, as well as the benefits to taking out a policy. However, creating a culture of insurance is not without its challenges. SME operators often inadequately estimate how seriously an adverse event such as a fire, flood or robbery could seriously affect the continuity of their businesses. In addition, entrepreneurs tend to view any type of insurance as an additional overhead to their business activity, so they prefer to rely on alternative contingency plans – for example, by using personal savings. Therefore, it is important that the insurance industry continue developing products that are tailored to this category of customers, and in that sense, there is a large potential market that insurance companies have yet to reach. “Small businesses owners often think that insurance is only tailored to large companies. There is also a lack of awareness of the policies directed at smaller players on the market,” Hé ctor Lucero, technical studies manager at APESEG, told OBG. “Although in recent years the availability of insurance to SMEs in Peru has increased, there remains ample room for the sector to develop. It is estimated that in our country, there are between 1.5m and 2m of these businesses, of which less than 5% would have some type of insurance protection.”

Insurance companies are looking into operational and commercial initiatives to encourage SMEs to take out health care plans for their employees. Juan Carlos Ordóñez, commercial manager of local health service provider Sanitas, predicts unprecedented growth in this area, telling local press in December 2017 that the number of policyholders is forecast to rise by 25% in 2018-19, from 850,000 members to over 1m. To compare, in 2019 growth in the broader sector is forecast at between 5% and 6%, adding about 40,000 to 50,000 people.

Getting Digital

Finding new markets will be key to ensuring growth, and there is good reason to believe that insurance companies will need to welcome the digital transformation. Firms in Peru are moving quickly to embrace insurance technology and gain space in the local market. Much in the same way as financial technology firms are changing the banking industry, insurance technology firms are contributing to innovation in the sector.

One such example is Hello Zum, an online provider offering the first 100%-digital auto insurance policy on the market. Based in Lima, the platform is licensed through an alliance with the local branch of global insurance firm Marsh, and works as a marketplace for companies and customers. Local giant Pacífico Seguros was the first to connect to the platform, followed by the insurance division of Scotiabank Perú and health services provider Sanna. According to local press reports, the platform is forecast to help contracting parties reduce their costs by at least 25%, while also significantly diminishing the time it takes to issue a policy.

Although the subsector is in the very early stages, insurance technology companies promise to be increasingly important in Peru thanks to the ability of technology to process data, the proper management of which allows insurers to work more efficiently in their internal procedures as well as offer better products (see Global Perspective).

Insurance has traditionally been dominated by large-scale and highly regulated companies; however, more start-ups are expected to enter the insurance technology segment, and the industry trend appears to point towards established companies promoting their own insurance technology ventures in the short to medium term.


A number of structural elements bode well for the Peruvian insurance industry. As the middle class continues to expand bringing rising levels of income and savings, personal lines of insurance will remain attractive products. Promoting a greater insurance culture should help boost the overall penetration rate, which will also allow the industry to cover a greater amount of losses caused by catastrophic events, such as El Niño, and contribute to a quicker recovery of the economy. Additionally, innovative products aimed at attracting previously neglected or underinsured areas should provide significant room for the industry to expand.