(MENAFN Press) The Insurance Industry in the Dominican Republic, Key Trends and Opportunities to 2016The Dominican Republic is the second-largest economy in Central America and the Caribbean region, and is classified as middle-income country by the World Bank.
After recording high economic growth averaging 9.5% between 2005 and 2007, growth slowed to 5.3% in 2008 and 3.5% in 2009 due to the global financial crisis and the country's close trade relationship with the US.
Nonetheless, the economy witnessed one of the highest growth rates of 7.8% in the Central American and Caribbean region in 2010, supported by a rise in domestic demand, increased exports and favorable economic policies towards foreign direct investment (FDI).
According to the IMF, the economy is expected to grow at a stable pace of 4“5% over 2012“2016.
The country's favorable economic growth has benefited the country's insurance industry, although despite strong growth during the review period (2007“2011), the insurance industry is still small by international standards.
Over the forecast period, increased investment in infrastructure development, high demand for health insurance products, new product development and a new mortgage law are expected to drive the growth of the industry.
Group life insurance accounts for a major share of the life insurance segment
The group life insurance category accounted for the major share of the life insurance segment during the review period.
The growth in the life segment was mainly led by an increase in group life insurance, which compensated for the slower growth in the individual life category, which was affected by high tax rates.
The growth in group life insurance is driven by growing corporate demand in expanding service sectors such as tourism and financial services, and industrial sectors such as mining and telecommunications.
Non-life insurance maintained stable growth
Stable demand for statutory third-party motor insurance and workman compensation insurance supported the growth in non-life insurance.
Strong demand for cover against fire and other damage to property, which is the largest category in the non-life segment, also drove growth during the review period.
Over the forecast period, a new mortgage law which aims to facilitate the growth of the housing market in the country will spur demand for insurance products related to property, such as mortgage insurance.
Low penetration in life insurance provides an opportunity for growth
Insurance penetration (measured by gross written premium as a percentage of GDP) in the Dominican Republic's insurance industry is low as compared to other countries in the Latin American and Caribbean region.
The country's insurance penetration stood at 1.3% in 2011, which was lower than the region's average penetration rate of 2.8%.
Over the forecast period, this large untapped market could present potential growth opportunities for insurance companies.
ncreasing consumer awareness of the benefits of insurance will also propel the growth of the insurance industry.
The Dominican insurance industry is highly concentrated
The Dominican insurance industry is highly concentrated, with the top 10, of a total of 35 companies, accounting for 92.7% of the total gross written premium in 2011.
Universal Insurance, Insurance Banreservas and Mapfre were the top three leading companies in the industry.
Over the forecast period, given the large number of domestic insurance companies, especially small insurers looking for organic growth and increasing competitiveness, there are opportunities for foreign insurers to access the country's growing insurance industry through partnerships with domestic insurers.
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