Latin America car park lacks insurance
Only about 25% of motorist in Latin America are driving with insurance other than mandatory third party liability coverage, significantly lower than developed countries such as the United States and the larger economies throughout Europe.
For the most part, lower GDP per capital means lower insurance premium penetration in a country. According to a seven-country analysis by Global Fleet, most country's in the region follow this pattern.
While the GDP per capita in Argentina is approximately US$13,995/y, only about 20% of its vehicle fleet is insured. Chile, which has nearly the same GDP per capita (US$13,722) has about 36% of its vehicles insured.
Latin America’s largest vehicle fleet, Brazil, has a GDP per capita of some US$9,324 and approximately 30% of its vehicles are insured. Meanwhile, Mexico (Latam’s 2nd largest fleet) reports about $9,120 GDP per capita and 25% of vehicles covered.
Finally, the estimated GDP per capita in Peru, Colombia and Guatemala are US$6,774, US$5,766, and US$4,567 respectively and the percentage of motorist with insurance in these countries are 23%, 17%, and 14%.
Meanwhile, according to a report by Mapfre regarding the weight of insurance premiums on national GDP, advanced economies such as the United States and the main European countries reported that annual insurance premiums were equivalent to more than 7% of GDP. In Latin America, this ratio is below 3%.
However, the report - which was prepared at the request of the Inter-American Federation of Insurance Companies (FIDES) - highlighted that we could be seeing advances in insurance coverage in some Latin American countries soon.
In order of appearance, those seen with the best chance for improvements are Mexico, Brazil, Colombia, Puerto Rico, Chile, and Peru, the report said, stating that the influencing factor is the design and implementation of regulatory frameworks which are more adjusted towards risks.
Some of the key elements seen helping to push more insured vehicles are: Managing expenses better, Favoring a balanced growth of different distribution channels, Sharing data and seeking synergies, and without a doubt Digitalizing insurers.
Finally, having better access to capital through economic growth certainly helps, in addition to improving education and financial inclusion as well as balancing out income distribution.