2nd September 2019 – Author: Luke Gallin
An expectation of continued, healthy growth, robust solvency ratios and stable appetite from reinsurance companies has seen A.M. Best assign a stable market segment outlook to Bolivia’s insurance industry.
According to international financial services rating agency, A.M. Best, Bolivia’s insurance industry grew by 11% in 2018, on the back of 3.4% growth in both 2016 and 2017, which outpaced gross domestic product growth of roughly 4% during the timeframe.
A.M. Best says that this type of growth is expected to persist as the country looks to meet aggressive targets for social and economic development.
Life insurance accounts for roughly 40% of premiums, P/C 53% and then Surety 5%. Data from the OECD claims that the region’s life insurance industry grew by 21% in 2018, which is the second highest of a list of 46 developing and developed countries.
The ratings agency notes that insurance information sources show that roughly 58% of non-life premiums and 28% of life insurance premiums are ceded to reinsurers. A.M. Best says that appetite from reinsurers is stable, and that this, combined with robust solvency levels also “eases concerns about earthquake risks in Bolivia.”
On average, solvency ratios are 257% of required capital for P/C insurers and 275% for life insurers.
“AM Best also views innovation as an important engine for further growth, especially through the growing adoption of microinsurance products, consistent with goals to eradicate poverty. Low premium products with automation and simplified underwriting could result in greater insurance penetration as well,” says the rating agency.