(MENAFN Press) Guatemala has a small insurance industry with only 17 insurers operating in the industry in 2011.
The global financial crisis affected the Guatemalan economy and thus had a direct effect on the Guatemalan insurance industry during the review period.
The insurance penetration, as a percentage of gross domestic product (GDP) in Guatemala, stood at 1.24% in 2011, which is very low when compared to developed countries.
The Guatemalan insurance industry is mainly comprised of domestic insurance companies but foreign insurance companies started to enter the industry after the change in insurance law in 2011.
Foreign insurance companies are allowed to operate in the country through branches.
The Guatemalan insurance industry was led by the property, motor and health insurance categories.
The high rate of road accidents supported the growth of motor insurance while a high risk of natural disasters supported the growth of property insurance.
The inadequate public healthcare system increased the scope for private health insurance in Guatemala. Considering the presence of such factors, the industry grew at a CAGR of 11.2% during the review period.
Insurance industry consolidation expected
The Guatemalan insurance industry is expected to consolidate over the forecast period.
Reforms in the insurance industry, as a result of changes in insurance law which modified the contract regulations, and mass commercialization are expected to support the process of consolidation.
Foreign insurance companies with a large variety of insurance products are expected to enter the industry as a result, thus minimizing the profit of domestic insurers.
This expected decline in profit is anticipated to influence domestic insurers to merge with foreign insurers while stricter reserves and capital requirement will further encourage the merger process.
High rate of road accidents
During 2001“2010, 27,000 traffic accidents were recorded, indicating a rate of 2,500 traffic accidents per year.
Such a high rate of road accidents increased the claims ratio in the country which has a direct impact on the profitability of insurers.
The high rate of road accidents also increased consumer awareness towards motor insurance.
Declining public healthcare system
The Guatemalan public healthcare system registered a decline in terms of service and coverage of population during the review period.
The public healthcare system in the country is one of the lowest in the American region and accounted for 1% of the country's GDP in 2011.
Such low healthcare expenditure means that healthcare is only available to 20% of the country's population and the quality and effectiveness of the service is limited.
Considering such ineffectiveness of the public healthcare system, private healthcare in Guatemala is expected to increase over the forecast period.
Increased rate of crime
Guatemala has one of the highest crime rates in the Central American region. The high rate of crime in the country resulted in an increased number of claims which affected the profitability of insurers operating in the country.
High levels of crime also increased the net claims ratio of Guatemala in the Central American region in 2011 and paid claims in the country's insurance industry increased by 18% during the review period.
Insurance categories such as motor, personal accident, and health were the most affected insurance categories in terms of net claims.
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