Chile more than doubles written premium in 10 years
The Chilean insurance market has more than doubled its written premium in the last 10 years, according to Jorge Claude, executive vice-president of the Asociación de Aseguradores de Chile (AACH), the Chilean Association of Insurers.
AACH hosted the 2015 FIDES conference in Santiago, Chile.
“There are 3.4 policies per capita and insurance density is the highest in South America, with $684 per capita,” explained Claude. “Nevertheless, there is still an important insurance gap to close.”
The 2010 earthquake which struck Chile, with a magnitude of 8.8 on the moment magnitude scale, affected six regions totalling 80% of the country’s population and left economic damages of around $24 billion, but only $6.3 billion were insured losses.
Then, after 2012, the growth of the Chilean insurance market slowed down, mostly to single digit numbers for the written premium.
“Nevertheless, the insurance market is still profitable and the number of insurance companies operating has increased year after year,” Claude noted.
The non-life insurance market in Chile grew 2.6% in 2016, while most business lines saw their premiums decrease (apart from motor insurance, surety and credit insurance).
For 2017, the forecast is a growth of 1% for non-life, with most of the business lines growing, except property and engineering insurance.
Claude believes that financial education is an important tool for increasing awareness of insurance. The AACH has been working through multiple initiatives over the last few years to increase education both in schools and universities.
“Also, since insurance companies are the second largest institutional investor in Chile, laws and regulations that encourage long-term investment could help boost the local economy and stabilise it in case of recession,” he said.
The Chilean Superintendence of Securities and Insurance is modifying the supervision approach regarding market conduct regulation, by “introducing a preventive approach based on principles that will serve as a framework to improve the regulation that rules the work of insurance companies and brokers”.
Claude explained that the regulation ensures the insurance industry considers corporate governance practices that promote customer trust and strengthen the industry.
Insurers and brokers must submit a self-assessment questionnaire regarding this regulation by March 2018.
Earlier this year, the country issued a law creating the Comisión para el Mercado Financiero (CMF) that will replace the current superintendence.
The CMF will include insurance, securities and banks (replacing also the banks superintendence), and will be governed by a board of five members, presided over by a chairman, with the aim of ensuring the proper functioning, development and stability of the Chilean financial market.
The life insurance market grew 11.9% last year, growth explained mostly by the increase of 14.5% of pensions annuities. For the year 2017, the forecast for the life market is a decrease of 2.1%, explained by the negative variation of 12.2% for pensions annuities, which represent about 50% of the written premium.
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