The performance of the Guatemalan insurance industry in 2010 has been relatively stable, despite the occurrence of two catastrophic events (storm "Agatha" and the eruption of the "Pacaya" volcano in late May) and the generally stagnant premiums of the main operating branch of the industry: Motor Vehicle Insurance. Thus, advances in operating costs, especially for claims incurred in the auto industry, despite the slowdown in premiums, reversed the operating deficit, but the industry still presents accident rates higher than the combined coverage average of the Central American region, which suggests the existence of future opportunities for improvement.
It is important to emphasize that although the aforementioned catastrophic events will impact the level of gross losses in the sector, adequate reinsurance protection available to the industry significantly offset these pressures, considering that in general, it is expected that the net effect on accident rate is moderate and in many cases related to the cost of reinstatement of reinsurance protections.
Fitch Ratings analyzed how insurers will cope with Pacaya Volcano and Agatha tropical storm in Guatemala, Honduras and El Salvador.
On a preliminary basis, Fitch considers that the insurance industry in Guatemala, Honduras and El Salvador will not be significantly affected by the disasters triggered by Pacaya Volcano and Agatha tropical storm.
There was an improvement in accident rates and operating performance in the Nicaraguan insurance sector in 2008, as reported by Fitch in a special report.
Thanks to the growth in insurance premiums in the period and progress in costs and accident rates, the sector was able to overcome the operating loss that occurred last year (especially the state insurance company), registering a combined index of 96.3% in 2008 compared to 103.7% in 2007. The good operating performance has enabled the sector to more than offset the decrease in net financial income contribution (by private insurance companies in particular) and impact on the greater overall profitability. The expected decrease in the level of economic activity and thus in the sales of insurances implies a major challenge for the sector and for protection of the progress achieved in the short term. At the close of the previous year, net insurance premiums totaled C$2.1 million, 14.0% above the amount registered in 2007. The faster growth in the case of private insurance companies (17.1%) is worth noting, taking into account the significant growth in premiums of Metropolitana Life Insurance Company (35.1%) and Lafise Insurance (25.7%). For its part, the INISER (Nicaraguan Insurance Institute) experienced a growth of 8.6%. The positive growth of the sector has been primarily in the business of auto and life insurance.
Fitch Rating's Special Report: "Insurance Industry Costa Rica: End of the State's Monopoly"
Costa Rica's insurance industry had been dominated by a state-owned monopoly until the new Insurance Law of 2008; up to December 2008 it is the largest and fastest growing market in Central America (excluding Panama).
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