MEXICO CITY: AM Best has assigned a stable market segment outlook to Bolivia’s insurance industry, based on healthy growth, robust solvency ratios and a sufficient appetite from reinsurers.
In a new Best’s Market Segment Report, titled, “Market Segment Outlook: Bolivia Insurance Industry,” AM Best states that the country’s insurance industry grew 11% in 2018, and 3.4% in 2016-2017, outpacing gross domestic product growth of approximately 4% during the timeframe.
AM Best expects the market to sustain the growth rate, driven by the aggressive targets for social and economic development.
AM Best also views innovation as an important engine for further growth, especially through the growing adoption of microinsurance products, consistent with goals to eradicate poverty. Low premium products with automation and simplified underwriting could result in greater insurance penetration as well.
Solvency ratios are on average 257% of required capital for property/casualty insurers and 275% for life insurers. Additionally, the reinsurance market’s appetite has been stable.
According to insurance information sources, approximately 58% of non-life premiums and 28% of life insurance premiums are ceded to reinsurers. The solvency ratios and stable reinsurance appetite also ease concerns about earthquake risks in Bolivia.
As this insurance landscape evolves, AM Best believes this segment will continue to respond appropriately to the myriad of challenges it will face over the near term.