Colombia is the fifth-largest insurance grocery store in Latin America by premiums collected. however, it features faint penetration and density – measures of premiums compared to the size of the economy and the population, respectively – compared to other large markets in the region .
however, the fact that the country has been able to weather the recent economic storms better than many in the region, by avoiding an outright recess for case, leave it well placed to start narrowing the gap over the coming years .
This should be helped by the increasing number of new entrants – some of which are boastful players globally, even if operate in a recess in Colombia – adding to rival, vitamin a well as the skill by local insurers and fiscal conglomerates of insurers in Central America and across Latin America, giving them access to new know-how and business models.

According to Swiss Re, Colombia ranked 43rd globally in dollar terms by premiums collected in 2015, with $ 7.8bn. This should be understood in the context of a depreciate currency, which caused premiums in dollars to show a 17.5 % fall for the year, evening as inflation-adjusted premiums denominated in the local currency jumped by 7.6 % .
During 2016 inflation-adjusted premiums continued to grow, but at a slower pace as economic growth slowed to 2 %, while inflation peaked at 8.97 %, a 12-year high, in July .

Macroeconomic Context

Hernán Avendaño Cruz, director of economic research at Fasecolda, the diligence representative body, flagged broader economic performance as the key driver of the sector. “ The macroeconomic environment is a all-important determinant of the development of Colombia ’ s indemnity sector, ” he told OBG. “ low unemployment, strong engage growth and decreasing labor market ease lead to more demand for liveliness insurance, pension and employment indemnity products. lastingness in the construction and finance sectors fuels requirement for indemnity on property and bancassurance. At the lapp prison term, the depreciating exchange rate has a rapid pass-through to premiums in certain indemnity segments, notably vehicles. ”


According to the Superintendencia Financiera de Colombia ( SFC ), the fiscal services regulative agency, there were 48 policy firms operating in the nation in early 2017. Of these, 24 were general policy companies, 19 specialised in life assurance, two were cooperatives and the remaining three were capitalization insurers .
While holocene years have seen an inflow of extraneous players of varying sizes, the colombian insurance sector continues to be dominated by a little issue of local anesthetic incumbents. indeed, most of these key players are linked to the country ’ mho three boastfully and long-dominant economic conglomerates, namely Grupo Aval, Grupo Empresarial Antioqueño ( GEA ), a business group of companies based in Medellín, and Grupo Empresarial Bolívar ( GEB ) .
These conglomerates besides control Colombia ’ s chief bank companies, while their policy arms are benefitting from both economies of scale and increased opportunities for cross-selling policy products to bank clients .

independent Players

together, the top five insurers control 55 % of Colombia ’ s indemnity market. Of these, the top three locally own firms account for 45 % .
With a 24 % partake of the commercialize, Grupo Sura is by far the dominant player. As part of GEA, it is besides closely linked with the single biggest bank in the area, Bancolombia, as its majority stockholder .
Seguros Alfa, separate of Grupo Aval, is second with a 14 % grocery store share. Grupo Aval includes four offprint banks, making them together the biggest bank group in the area ( see Banking chapter ) .
These are followed by GEB ’ s Seguros Bolívar, which accounts for 7 % of the market and is linked to colombian bank Davivienda. The entirely early policy firms with a market plowshare of 5 % or more are Axa and Allianz, which are both foreign-owned and have 5 % of the market each. “ The lead three players have been pretty stable for a long time, but outside these there has been more campaign, with companies such as MAPFRE, Liberty and Allianz jostle for position, ” Milena Carrizosa, film director at Fitch Ratings, told OBG. “ sometimes this is done by focusing on niche segments preferably than going neck and neck with the big players across all business lines. ”
“ There are a fortune of smaller players in the market that are either part of big multinationals or domestic firms occupying hard recess positions, ” Johann Goebel, associate conductor of indemnity at Fitch Ratings, told OBG. “ In either event, there is no significant atmospheric pressure towards consolidation. ”

Foreign Ownership Surge

With relatively low dinner dress barriers to accessing the market, a large count of foreign players have entered the colombian policy sector in recent years. Foreign players now make up 36 % of the market, based on SFC data from the end of September 2016 .
foreign entrants have typically targeted particular segments or niches, preferably than competing across all commercial enterprise lines with the biggest grocery store players. A noteworthy example is the 2014 skill of a controlling share in Confianza by Swiss Re. Confianza was the go hostage writer in Colombia, with a particular focus on policy related to infrastructure projects, such as the 4G road-building program .
Another significant entry was the 2013 learning of a 51 % interest in Colpatria Seguros by France ’ s Axa Insurance, which made it the fourth-largest musician in the market. similarly, Germany ’ sulfur Allianz has focused on niches such as car overlay and microinsurance since its 1999 entrance to the colombian market, making it the fifth-largest actor by 2016 .
typically, foreign firms have entered through the skill of a domestic firm, but there are besides some examples of greenfield entries, again normally with a focus on particular niches or segments .
For example, since its 2014 introduction to the market, Berkley International Seguros Colombia has become a contribute provider of marine, construction and engineering, indebtedness, and surety policy in the country. After establishing a spokesperson office in Bogotá in 2014, offering reinsurance products, the firm expanded its oblation in 2015. Another example is Switzerland ’ second Zurich Insurance, a leading global player that entered the market in 2015 .
More recently, the UK ’ mho Lloyds Insurance established operations in Colombia in 2016, focusing on the reinsurance section. Juan Carlos Realphe, Lloyds ’ area coach, explained the argue behind this latest travel : “ The reinsurance sector has changed dramatically in the last five years. Five years ago 50 % of Colombia ’ mho reinsurance business was placed in London ; nowadays it is equitable 25 %, ” Realphe told OBG. “ One reason for this is that more goes through our regional hub in Miami, so far another component is that there is more capacitance and interest from local groups to meet reinsurance requirement. so with our direct local presence we hope that we can increase the placement of premiums from the colombian market to the London market. ”
Goebel told OBG : “ We have seen a lot of foreign entrants in holocene years, following the 2013 regulative reforms and with a horizon to seizing opportunities promised by infrastructure projects, but we are improbable to see as many entrants in the near future, particularly as the economy remains indeed weak. ”

market Moves

Mirroring the efforts of Colombia ’ s leading fiscal conglomerates at expansion into latin american and central american markets in late years by acquiring banking assets, the same design is beginning to emerge in the indemnity sector. One of the most meaning developments in this regard was the 2015 skill of the latin american policy occupation of Royal Sun Alliance for $ 614m. This motion saw Grupo Sura consolidate its place across romance american indemnity markets, becoming a top musician in Chile and Uruguay, american samoa well as an authoritative niche operator in Brazil and Mexico, the continent ’ s two largest economies .
“ We are seeing a identical matter to active in terms of colombian bank, and policy groups expanding into Central America then using the experience, capacities and business models of the assume firms as a template to boost their domestic insurance business, and to increase penetration and market parcel in Colombia, ” Goebel told OBG .


insurance premiums in 2016 total COP23.9trn ( $ 7.2bn ), up 10.9 % on 2015 ’ mho COP21.5trn ( $ 6.5bn ) in nominative terms. This marks a minor slowdown on the 13 % growth seen in 2015, but hush a acute increase on the 1.1 % growth rate of 2014, when premiums contracted in real terms .
bounty expansion has waxed and waned in lineage with the broader economy over the by decade, though generally growing in substantial terms at a faster rate than GDP. Nominal premium emergence peaked at 23 % in 2008, and again at 19 % in 2013, indicating that the current rate of growth is steady but not spectacular in diachronic terms. Analysts expect premiums to grow by 8-10 % in 2017, which would see inflation-adjusted agio emergence of 3.5-5.5 %, in actual terms, in wrinkle with the 4.4 % real emergence ( 11 % nominal ) in the year to the end of November 2016 .
While much of this growth in premiums is constituent, there is besides an component of inflation indexation in certain segments. Auto and health insurance are peculiarly sensitive to pass-through inflation from currency depreciation, because the prices of centrifugal vehicles and checkup costs are frequently dollarised. similarly, segments like social security and workers ’ recompense are linked to engage increases. There has, consequently, been significant version in premiums growth across occupation lines .


In the first 11 months of 2016 insurance claims across the sector increased as a share of total premiums to 60 %, up from 57 % in the lapp period of 2015, according to Fasecolda. Claims in the area were up across all segments apart from general indemnity, with a luminary spike in the social security segment from 93 % to 109 % .


With firm requirement for colombian assets on fiscal markets, 2016 was a hard year for policy firms ’ investments, with sum gains rising from COP2.8trn ( $ 840m ) in the foremost 11 months of 2015 to COP3.8trn ( $ 1.1bn ) by the like point in 2016. On the other hand, technical performance in core indemnity segments was not peculiarly strong, with increased price competition in life policy taking a toll on net income margins, for example.

Costs besides increased by 10 % across the sector, in wrinkle with premium growth, and remained relatively stable as a share of premiums, ticking up slightly in property and personal insurance, but moderating in social security. technical foul losses consequently rose significantly from COP1.36trn ( $ 408m ) during the first 11 months of 2015 to COP2.34trn ( $ 702m ) in the same period of 2016. This was more than offset by the potent performance of investments, however, leading to an increase in profits for the sector from COP1.3trn ( $ 390m ) to COP1.5trn ( $ 450m ) for the January-November 2016 period .

Penetration & Density

market penetration – measured by indemnity premiums as a share of GDP – remains relatively abject in Colombia, at 2.64 % at the goal of 2015. According to figures provided by Swiss Re, this sees the country ranked ahead of Mexico ( 2.21 % ), Costa Rica ( 2.04 % ), Peru ( 1.92 % ) and Guatemala ( 1.24 % ) in Latin America .
penetration is about double this level in Chile ( 4.74 % ), and still significantly higher in both Brazil ( 3.9 % ) and Argentina ( 3.26 % ) .
“ not only is insurance penetration relatively broken in Colombia, but it would be one-third lower if it were not for indemnity made mandate by the government, such as social security and third-party car insurance ( Seguro Obligatorio de Accidentes de Tránsito, SOAT ), ” Carrizosa told OBG. “ This first gear penetration signals a lot of room to grow, and we see particular scope for growth in the group life indemnity segment in the coming years. ”
however, some of the biggest barriers to increasing the penetration rate are cultural, and lack of awareness is a major topic. “ We don ’ thyroxine so far have a solid culture of life policy in Colombia. penetration for this segment is less than 1 %, ” Joaquin Quiroz, CFO of Pan-American Life, told OBG. “ however, this is a big business opportunity for insurance firms that are ready and able to offer life products tailored to the batch market. Another important development is that people are starting to see the savings prize of animation products, which could provide for their children ’ sulfur education, for exemplar. ”
In terms of premiums per head, Colombia ( $ 162.60 ) ranks lowest of the large markets in the region, and well below the regional average ( $ 251 ), but over three times higher than Guatemala ( $ 47.40 ), one of the least-developed markets in the area .


Within the liveliness indemnity segment, there is a traditional division between group and individual policies. The early are typically employee indemnity schemes which have a big count of members or loans linked to, for exercise, car loans. The latter are taken out by private individuals .
Following recent regulative changes, firms are encouraging their employees to opt out of group schemes and to take out individual policies, resulting in a meaning slowdown in growth in group life indemnity to 2 % per year, and a represent increase in individual life premiums increase to 15 %. overall, however, the biography segment did not grow army for the liberation of rwanda ahead of the inflation rate. Previously it had been growing at double-digit rates per annum .
One authoritative regulative change to have an impingement on the life sentence segment was fresh legislation to oblige providers to be more transparent on pricing – and the possibilities offered by option providers with more competitive price – when selling insurance products linked to, for exercise, mortgages or other loans. “ In Colombia you need liveliness indemnity when you take out a mortgage, ” Quiroz told OBG. “ In the by this was a great opportunity for banks to cross-sell insurance products to their borrowers. But after the law changed recently it provided further impulse for growth in the individual life insurance section in 2015 and 2016. ”
This change besides provided an opportunity for smaller players in the colombian indemnity sector – those not tied to the boastfully domestic banks – like Allianz to grow their market share .

Property & Casualty

As in many countries, obtaining a mortgage in Colombia requires that house insurance be taken out. Most houses that are not mortgaged are uninsured, signalling that a culture of firm indemnity has not so far taken clasp in a country where it is not obligatory. however, amid a construction boom, mortgage-related policy has been growing at double-digit rates .
Delays to fiscal closings and performance of infrastructure projects caused premium growth in the segment to underperform relative to expectations, contracting by 4 % in the beginning 11 months of 2016. As these projects come on-stream in 2017 and 2018, however, the agate line is expected to pick up .
Given the extent of planned infrastructure investment in Colombia in the short, average and long-run ( see Economy chapter ), this segment appears poised for rapid growth. indeed, this dynamic was one of the factors attracting global players to the sector in late years. This section has besides been one of the most authoritative in terms of attracting fresh niche players to the sector .

car policy

On the bet on of rising costs due to currentness depreciation a well as solid cable car sales, the car insurance segment was growing by around 13 % during 2016, following a similarly strong performance in 2015. however, this momentum is expected to slow in 2017 as substitute rates fade in importance to drivers, and a slowdown in consumption weighs on car sales. On the other hand, even more rapid emergence in minibike sales promises to grow the car indemnity market among consumers towards the bottomland of the pyramid .
Third-party car insurance, or SOAT, is compulsory in Colombia. Premiums have been growing at 7-9 %, and 10 % in the first 11 months of 2016, slower than growth in other car insurance segments. This segment is blighted by issues relating to fraud .
“ People involved in an accident might attend a clinic without making an indemnity announcement. then, six months former when a bill arrives from the clinic, they can make an insurance claim under SOAT, declaring the treatment to have been as the resultant role of a traffic accident, whether this was the case or not, ” Arturo Alonso Najera Alvarado, director of statistics at Fasecolda, told OBG. “ It can be very hard to verify the veracity of the claim, so suspected fraud is considered to be identical high. ” Analysts expect the government to tighten regulations in this area therefore as to clamp down on deceitful claims .

Accident & Health

Professional risk policy has been growing slightly ahead of wages, with the minimum engage – widely seen as an economy-wide proxy – having increased by 7 % in both 2016 and 2017. This segment was hit hard by the further fall in oil production in 2016, a sector with which it is close linked. otherwise, it has performed relatively well in recent years as the tug market has remained strong, but it may face greater pressures in 2017 as the unemployment rate rises .
private health insurance is becoming increasingly popular among consumers, catering to an emerging middle classify and its desire to receive better and timelier health care. however, firms operating in this segment are besides efficaciously competing with health-promoting companies, which offer option products such as complementary color plans and prepay medicines, and provide varying degrees of elaborate coverage and precedence serve .

regulative reform

The most crucial regulative change of recent years was the 2013 modification to the calculation of technical reserves through Decree 2973. More recently, 2015 saw the issue of promote guidelines related to the calculation of incurred but not reported reserves .
While some firms are expected to need to raise capital or restructure their balance sheets in club to meet the new requirements during 2017, many others are already well capitalised or are partially of larger multinational indemnity firms with access to significant cross-border finance .
According to the SFC, Colombia is taking a gradualist approach to the implementation of the Solvency II regimen. “ We are working towards the borrowing of Solvency II, but we are going more lento than Mexico, for example, to avoid shocks to the grocery store, ” Ernesto Murillo, director of functional gamble at the SFC, told OBG. “ We have already done a fortune in terms of strengthening reserve requirements and balance sheets across the insurance sector. In 2017 we envisage promote bring on themes like assets liabilities management and consumer protection. ”
meanwhile, according to Fitch Ratings ’ 2017 expectation for colombian insurance, “ the sector ’ s regulative environment is one of the most advanced in Latin America. Regulators continue to gradually align with international standards. ”


With GDP growth expected to accelerate reasonably over the following two years in Colombia from its 2016 lows, and ostentation on a downward trajectory from its 8.97 % bill to approach the amphetamine conclusion of the central bank ’ s 2-4 % target range by recently 2017, there is telescope for a medium-term lift in inflation-adjusted growth in premiums .
similarly, increased investment in infrastructure projects is expected to boost business lines including construction and machinery indemnity, a well as surety bonds, once construction is under room.

however, weak consumer confidence, the impact of holocene tax reform – notably the hike in value-added tax ( VAT ) from 16 % to 19 % – and an have a bun in the oven uptick in unemployment likely mean that inflation-adjusted premium growth will be tone down in the near term. While the VAT is not imposed directly on life insurance, and remains unchanged at 5 % on health insurance, it is expected to have an collateral impression on consumer demand by reducing real incomes. Likewise, Fitch views policy occupation related to infrastructure projects as a more medium-term play, given delays in project execution .
Increased price competition, peculiarly in life and car policy, can besides be expected to weigh on profitableness in 2017, while the challenge investment environment ( see Capital Markets chapter ) could see profits from this source reduced .
Over the longer term, a bigger growth opportunity lies in increasing the penetration rate – presently a small over half the level of that in leading latin american countries such as Chile – while the eventual aging of the nation ’ randomness still relatively young population bodes good for demand for the wholly image of insurance products, particularly life and pensions. Increased digitalization provides the expectation of better fiscal inclusion body broadly, vitamin a well as increased indemnity penetration in particular .

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