Latin America 2024: Declining premiums signal pivots and policy change ahead

The Latin American insurance market is entering a period of recalibration. 

According to Swiss Re’s Latin America market report 2024, property and casualty (P&C) premiums are expected to slow to 3.3 per cent growth this year from a projected 6.3 per cent in 2024, and life and health (L&H) premiums are also projected to decelerate to 4.0 per cent growth from an estimated 8.0 per cent in 2024.

Amid shifting economic and regulatory conditions, the challenges and opportunities are unprecedented, and reinsurance leaders will be preparing for a strategic pivot. 

Economic growth across Latin America is forecast to decelerate, with real GDP expanding by just 2.2 per cent in 2025 compared to 2.5 per cent in 2024. 

Brazil and Chile are particularly notable for their slowdown, with both expected to achieve only 2 per cent GDP growth this year. 

Meanwhile, Colombia offers a glimmer of optimism with an anticipated growth rebound to 2.4 per cent, supported by easing inflation and relaxed monetary policies.

Inflation across the region remains a persistent challenge, averaging near or above central bank targets: Brazil’s inflation is set to hover at 4 per cent, while Mexico will face 3.8 per cent in 2025. 

Central banks are cautiously easing monetary policies, though currency depreciation and sticky core inflation pose significant constraints.

Protection gap looms:

The slowdown in premiums reflects broader economic realities. 

After a robust performance in 2024, driven by favourable market conditions and higher interest rates, both P&C and L&H insurance growth are set to moderate. 

Total premiums are expected to grow by 3.8 per cent in real terms, down from an estimated 7.6 per cent in 2024.

The large protection gap, totalling $151 billion in 2023, underscores untapped potential. 

Efforts to address this gap, coupled with regulatory changes promoting open insurance frameworks, may enhance market access and affordability. 

However, slower economic growth and inflationary pressures could temper the pace of these advancements.

A hard market on the horizon?

The declining trajectory of P&C and L&H premiums requires a proactive approach from reinsurance leaders; collaboration with local insurers to close protection gaps, innovation in digital solutions, and agile risk management, will be critical. 

The ongoing regulatory push for open insurance frameworks also demands adaptation to new competitive dynamics.

While commercial insurance pricing rose 3 per cent in 2024, driven by motor and property lines, risks such as FX volatility and social inflation could sustain hard market conditions. 

Insurers must anticipate escalating claims, particularly in the health and auto sectors, where imported product costs and currency fluctuations are pressuring profitability.

As P&C and L&H premiums face declining growth rates, the path forward lies in strategic agility. 

Reinsurance leaders must navigate economic headwinds, leverage nearshoring opportunities, and innovate to address persistent protection gaps. 

The ongoing story of Latin America is not merely one of challenges but of untapped potential waiting to be unlocked through foresight and action.

Country spotlights: opportunities and challenges

Brazil: Inflation struggles and exchange rate volatility

Brazil’s economic growth is projected to slow to 2 per cent this year, with inflation persisting at 4 per cent. The insurance sector will mirror these trends, with premium growth declining to 3.6 per cent from 7 per cent in 2024. Regulatory changes such as compulsory liability insurance for road transport may offer some growth avenues, but fiscal instability and exchange rate volatility remain key concerns.

Mexico: Nearshoring provides a lifeline

Mexico’s nearshoring boom could add $154 billion to its manufacturing exports by 2028, offering a rare growth engine. However, insurance premium growth is expected to slow to 3.9 per cent in 2025, down from an 11.7 per cent surge in 2024. Rising costs in motor and health lines and heightened FX risks could further challenge profitability.

Colombia: Inflation and fiscal concerns

Colombia’s projected 2.4 per cent GDP growth in 2025 contrasts with lingering inflation and fiscal deficits. Insurance premium growth is forecasted to accelerate to 4.1 per cent, driven by regulatory tailwinds. Yet subdued private investment and fiscal imbalances pose long-term risks.

Chile: Stabilising amid reforms

Chile’s economy is stabilising, with 2.0 per cent growth forecast for 2025. Insurance premiums are expected to grow by 3.8 per cent, compared with 2.5 per cent in 2024, bolstered by strong performances in health and motor lines. 

Pension reforms and fiscal consolidation efforts offer promising signs for sustained market confidence.

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