Colombia’s life insurance market has been growing in recent years but still remains immature compared to the sectors of some other large Latin American nations. The penetration rate — premiums as a percentage of national GDP — for life insurance hit 0.79% in 2015, according to a recent report by London-based research group Timetric. Now accounting for 16.9% of premiums written across all lines, this makes life the second largest line in Colombia.
But this penetration rate is well below those seen in Chile (2.91%) and Brazil (2.09%), according to Zurich-based reinsurance giant Swiss Re’s “World Insurance in 2015” report. Colombia’s life market penetration does exceed those of Argentina (0.59%) and Panama (0.71%), however. And it is nearing the levels seen in Mexico (1.00%) and Peru (0.92%).
Among all lines, Colombia wrote $2.3 billion USD in insurance premiums in 2015 with a penetration rate of 2.64%, a bit higher than the emerging markets average of 2.6%, per Swiss Re.
This remains significantly less than the $6.9 billion USD and $3.5 billion USD written, respectively, in Chile and Argentina, two nations with smaller populations. Brazil dwarfs the rest of the region with $37.1 billion USD written across all lines, while Mexico ranks second in Latin America with $11.5 billion USD.
While the life segment continues to expand across Latin America, Swiss Re notes that it is not growing at the same pace it was during the commodities boom. “Growth in Latin America will remain below recent trend levels due to price competition, demand weakness, and heightened financial and economic volatility,” said the company in its latest world insurance report.
In Colombia, life insurance remains heavily concentrated, per Timetric. Five companies wrote nearly two-thirds (63.4%) of premiums in 2015, with bancassurance leading the way for distribution in a market dominated by group life insurance products.
“Bancassurance is the most popular and trusted distribution channel offering credit life, term insurance, and pension products to middle- and low-income groups in Colombia,” said Timetric.
In addition to looking at penetration rates, the Timetric report analyzed various aspects of the Colombian life insurance market results over five years from 2011 to 2015 and offers a forecast through 2020. The study also compares the Colombian life sector with those of its Latin American peers, looks at different distribution channels, and details the nation’s regulatory scheme.