An aging population, a low penetration rate and rising disposable income are expected to support the growth of life insurance in Argentina from 2014 to 2019, according to a new Timetric report.
The report – Life Insurance in Argentina, Key Trends and Opportunities to 2019 – is available at Timetric’s Insurance Intelligence Center (IIC).
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A key theme from the report is that the life segment’s gross written premium increased from ARS5.8bn ($615.8m) in 2010 to ARS18.5bn in 2014, at a compound annual growth rate (CAGR) of 33.5%.
The growth was supported by increased life expectancy, the growing aging population and the strong performance of group life insurance, which was the dominant life sub-segment during 2010-2014.
Looking ahead, the Argentine life segment’s gross written premium is forecast to rise from ARS18.5bn in 2014 to ARS 62.8bn in 2019.
Key factors expected to drive growth in Argentina’s life insurance market between 2014 and 2019 are:
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By GlobalData- An aging population
- Low insurance penetration
- Rising disposable income
- Emphasis on consumer protection and reduction in fraudulent activities
There are also several challenges facing Argentina’s life insurance market. These include:
- Recent currency instablity
- An Increased investment limit affecting the capital positions of insurers
For example, with high inflation and an increase in the bank lending interest rate from 10.6% in 2010 to 24% in 2014, Argentina slipped into economic recession in Q1 2014, forcing companies to cut operating costs and lay off staff.
The country recorded an unemployment rate of 7.2% in 2014, which was the highest among its neighbouring countries, such as Brazil with 4.9%, Paraguay with 5.5%, and Uruguay with 6.5%.
An EY report published in 2014 noted that the complex, highly structured economic framework of Argentina has a strong influence on the insurance industry.
While the country is the third-largest economy in Latin America, at the time of publication, the EY report said the country’s Central Bank was continuing to hike interest rates and tighten monetary policy.
The EY report: "These factors are encouraging heightened price competition within the industry, and making it more complicated to assess sufficient rates and interpret statutory gains (losses) and financial income (loss) disclosed by insurers."
