MEXICO CITY--(BUSINESS WIRE)--Insurance companies operating in Panama’s insurance market have demonstrated sound capitalization levels, profitable underwriting practices and evolving risk management profiles, and these factors are supporting AM Best’s stable market segment outlook on the industry.
A new Best’s Market Segment Report, titled, “Market Segment Outlook: Panama Insurance,” states that AM Best believes that the Panama industry’s operating fundamentals will support growth, despite pressures such as stagnation in the construction segment and uncertainty surrounding the country’s 2019 political elections.
Panama is one of Latin America’s most dynamic economies, with an insurance segment that expanded by 5.4% in 2017, just above the 5.3% gross domestic product growth. The country has been a consistent growth engine for the overall Central American insurance market, which grew by an overall 7.1% in 2017. Its 29.3% regional market share by gross written premium (GWP) reflects its leading position, as Panama is an important driver of the region’s premium volume for life, automobile insurance and health. The health segment in particular has grown above the other business lines, as reflected by a 10.2% compound annual growth rate for the past five years, and is the primary driver of growth in Panama’s market.
Among the 24 insurance companies, the top five hold nearly three-quarters of the market share based on GWP. The sound underwriting performance of these companies drives overall premium sufficiency levels, as reflected by a weighted average combined ratio of 85.6. However, claims expenses are increasingly pressuring premium sufficiency, signaling a highly competitive environment for the industry’s underwriting practices.
The industry’s enterprise risk management (ERM) framework has benefited from a regulatory regime that focuses on the prevention of money laundering and corporate governance, to close loopholes and minimize financial risks. AM Best expects that further improvements in the industry’s ERM framework will safeguard the financial strength of Panama’s insurance industry.
To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=280999.
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