Latin America

Key developments in 2024

The Latin American insurance market witnessed remarkable growth in 2024, reflected in an increase in product sophistication and robust premium growth. This is due to the continued economic growth in different countries, which has led to Latin America becoming one of the fastest-growing regional insurance markets in the world.

This year was marked by an increased frequency of extreme weather events which have been seen as linked to climate change, including hurricanes, floods, wildfires, and storms. These caused substantial economic losses and increased claims, particularly affecting property insurance lines. For example, Mexico was hit by a major hurricane for the second consecutive year; Bolivia experienced one of its most devastating wildfires; Brazil experienced record rainfall and flooding disrupting renewable energy projects, including hydroelectric plants, and Chile faced intense storms that left several places in the capital without electricity for almost two weeks.

The increase in frequency and severity of these events raised the question of whether the sector could absorb losses without significant adjustments to premiums and coverage limitations and without updating the insured values to prevent underinsurance. For instance, the aftermath of Hurricane Otis significantly influenced reinsurance renewals in 2024, highlighting the need for additional capacity to respond to such events.

Finally, economic instability in some countries further compounded the challenges, with an increase in social conflicts following presidential elections in countries such as El Salvador, Panama, Mexico, the Dominican Republic, Uruguay, and Venezuela. This has resulted in a rise in political violence-related losses in the region.

What to look out for in 2025

The Latin American insurance market faces a challenging, if dynamic 2025, shaped by global and regional factors. Geopolitical tensions, energy price disruptions, regulatory changes, and economic slowdowns are expected to influence the market. While premiums are projected to grow, the pace can be expected decelerate compared to 2024.

Slower economic growth in the U.S. and China, Latin America's primary trading partners, will likely affect export-dependent economies such as Mexico and Chile. Besides, geopolitical tensions and trade policy hostility will raise inflation across the region, increasing claims costs, particularly in Property and Casualty (P&C) insurance, due to rising repair and replacement expenses. However, nearshoring trends may offset some of these challenges, offering opportunities for regional growth.

The recognised need for additional capacity effectively to manage the increasing demand and exposure to large-scale claims will significantly expand the role of Managing General Agents (MGAs) in the region, driven by the region's economic growth and evolving risk landscapes. MGAs will play an essential role in providing capacity, managing risks, and filling coverage gaps by offering specialised solutions for niche markets like Nat Cat exposures.

Moreover, in response to rising claims and operational costs, insurers in Latin America will adopt technologies such as artificial intelligence and data analytics to automate claims processes and expedite settlements. Even though the region is still in the early stages, these technologies are expected to play a greater role in modernising claims handling across the region.

Finally, political violence-related claims, driven by cartel activity and social unrest, are expected to rise, particularly in Mexico and Ecuador. Insurance products covering property, political violence, kidnap and ransom, cargo and transit, extorsion, liability and cyber risks are poised for growth as businesses seek protection against these.

Explore Annual Insurance Review 2025