Revival in automobile sales, favorable regulatory initiatives, and significant investment by insurers to develop new digital insurance products will support the growth of the general insurance industry in Mexico over the coming years, according to GlobalData.
The leading data and analytics company forecasts that the general insurance industry, in terms of gross written premiums (GWP), will grow from $15.4 billion in 2020 to $20 billion in 2025 a compound annual growth rate (CAGR) of 6.2%.
Prasanth Katam, Insurance Analyst at GlobalData, comments: “This growth is dependent on Mexico’s economic recovery, which is currently seeing a strong revival with growth of 6.1% forecast by the end of 2021 – after contracting by 8.2% in 2020 due to the COVID-19 pandemic. With a fast recovery comes a boost for the general insurance industry, which is expected to bounce back in 2021 with 3.3% growth.”
GlobalData’s analysis of the top three sectors of Mexico’s general insurance market reveals that:
Motor insurance
- Motor insurance is the largest general insurance line in Mexico, with a GWP share of 32% in 2020. The segment is expected to grow at a CAGR of 2.6% during the 2020-2025 period.
- The segment is expected to rise in 2021, with an ease in lockdown restrictions and increase in new car sales.
- The insurance regulator’s mandate in August 2021 to all licensed insurers to offer motor passenger and cargo liability insurance in Mexico City is expected to provide greater flexibility to customers to choose the insurer of their choice. This will have a positive impact on the motor insurance segment as previously, only selected insurers were providing these products.
Personal accident and health (PA&H) insurance
- As a result of the ongoing pandemic, there is more awareness among people for health insurance products. PA&H is the second-largest segment in Mexico’s general insurance industry, with a GWP share of 30.9% in 2020. The segment registered 10.7% growth in 2020, driven by increased consumer awareness.
- Further, the increase in demand of medical services such as telehealth and online consultation has prompted insurers to design products focused on preventive medicine. An increase in demand for no contact- online and telephonic consultation services drove insurers to design new products focused on preventive medicine. Insurers have also adopted technologies to provide customized products. PA&H insurance is expected to grow at a CAGR of 8.9% during 2020-2025.
Property insurance
- Property insurance is the third largest segment in Mexico’s general insurance industry, accounting for a 20.4% GWP share in 2020.
- The segment is forecast to grow at a CAGR of 6.6% during the 2020-2025 period.
- Mexico is susceptible to frequent natural disasters due to its unique geographical location, which is one of the reasons for high demand of property insurance.
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