Growth in sales of vehicles and homes in the country has generated an opportunity for the insurance business, in a market where penetration is only 3%.
Tuesday, November 7, 2017
Greater purchasing power and the consequent increase in purchases of homes, cars and other goods is generating interesting opportunities for other complementary businesses.
The insurance sector is one such that can take advantage of this opportunity, since despite the fact that the purchase of homes and vehicles is growing, there is still not in general, much awareness of the importance of protecting against thefts, fires, road accidents, medical expenses and other eventualities.
According to Ernesto Abraham Rodríguez Muñoz, president of the Nicaraguan Association of Professional Insurance Agents (Anaps), "... in the region, Panama leads the insurance market, followed by Costa Rica and Guatemala, then El Salvador, Honduras and in last place is Nicaragua. In addition, while in the rest of the region insurance sales for people predominates, in the country insurance policies for protecting assets or against damages are sold more and to a lesser extent are those for protecting people."
Laprensa.com.ni reports that "...Despite the low penetration, Nicaragua is seen as an opportunity because growth of the economy means that there are more people with the possibility of acquiring insurance.'Because there are insurance policies from the cheapest which cost 12 dollars a year up to any price, the limit will depend on the needs of the client.Here we are clear that previously the economic conditions did not allow people to acquire them because minimum per capita income was very low but that is changing ... In addition, the offer has been expanded with more accessible products',Rodríguez added."
Last year in El Salvador, net premium income totaled $702 million, 6.8% higher than in 2018.
Directors of the Salvadoran Association of Insurance Companies (ASES) explained that between 2018 and 2019 net premium income increased by $44 million, from $658 million to $702 million.
Auto policies are the fastest growing category, with an increase of 14% so far this year compared to 2013.
Lack of a culture of prevention is preventing the emerging Nicaraguan insurance market from achieving high growth rates in most policies. Car policies are the most sought after, but those for life, property and health are growing slowly.
In the last five years penetration of the insurance market did not reach even 2% of GDP because people see insurance as an unnecessary expense.
According to Richard Cohen, executive president of the Salvadoran Association of Insurance Companies (ASES), penetration of this market has the potential to grow up to four times in the next few years.
A low penetration level of insurance as related to GDP allows for sustainable growth of insurance businesses.
In the past five years, Panama has seen an explosion of commercial development and an influx of insurance companies. The country is about to remake its insurance legislation, which is also aimed at helping the country become a regional hub for insurance and reinsurance, according to Carlos Abrahams, a director at Global Intermediaries. Global is a specialized reinsurance consultancy and brokerage in Panama City, Panama.
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