Panama's insurers swim in a rather crowded pond, yet lateral approaches to the customer adopted today promise bigger premiums written tomorrow.

According to Ernest & Young (EY), the global middle class—the great white hope of all emerging markets—is set for swift growth over the coming two decades, and is estimated to account for a full half of the world's population by 2030. Naturally enough, financial inclusion is a key element in the equation. In Panama, then, as elsewhere, the growth of this class among its 3.8 million population is the insurance sector's premium source of tomorrow.

Over 2013 the global insurance business saw a modest rise of 1.4% to $4,641 billion in terms of direct premiums written. Data reveals that while developed market growth deteriorated to just 0.3%, emerging markets rose 7.4% for the year. And while working from a low base, the EMs have seen a positive trend on the back of industry reform and relative economic stability. In terms of Panama specifically, Gabriel R. de Obarrio III, Executive Vice-President and General Manager of Generali summed up the local environment thus, “The sector has grown to the point where today's 32 companies are to be joined by a further two that have recently been approved. Clearly then, margins have become squeezed, with technical margins virtually at zero. A glance at the figures reveals an industry witnessing growth with a healthy balance between diverse business lines."

Industry regulator, the Superintendency of Insurance and Reinsurance, indicates that between January and September of 2013 insurance sales rose 8.5% YoY to $892 million, nudging nicely toward that magic $1 billion mark. Policies sold were predominantly from the auto and health segments, where auto insurance saw sales of $153.7 million and health $146.5 million. Group life insurance sales stood at $110 million. ASSA led the market with a 16.9% stake, followed by Internacional de Seguros on 16.3%, and MAPFRE Panama in third place on 13.8% for the period. A Superintendency report indicated a pronounced rise in claims to $375.8 million for the period, up from $311.7 million in September 2012.

To boost its tourism offering, not least by targeting those arriving for health, back in 2011, Panama enacted free health insurance for tourists. With the exception of extreme sports and drug-related accidents, visitors found themselves covered for accidental death up to $20,000, hospitalization and medical expenses for accidental injury or disease contracted in Panama up to $7,000, dental emergency up to $ 2,000, and administrative legal assistance up to $3,500.


According to Central American Data, in 1H2014 total premiums written registered at $657 million on a 12% YoY rise. Among these, health insurance, auto, and group life policies claimed roughly 45%. On a rising trajectory in recent years, auto insurance accounted for $112.4 million, up 9.8% YoY for the period. Second was the health segment on $108.3 million, on 14.46% YoY growth, and group life, up 3.93% YoY to $75.1 million in policy signings.

Symptomatic of Panama's persistent struggle against irregularity, the highest percentage sales rise was for policies against theft at the corporate level, namely fidelity cover against employee theft, and dishonesty, disappearance, and destruction (DDD) coverage, which rose a whopping 477% in June 2014 to $5.3 million from $924,750 a year earlier. In fact, on October 19, 2014, Panama City hosts a Superintendency of Insurance and Reinsurance forum on the impact on the sector of irregularity, principally money laundering.


Luis Della Togna, Superintendent of the Superintendence of Insurance and Reinsurance of Panama, told TBY that, “The 2012 Insurance Law is a major achievement for the insurance sector, and is the result of the collaboration of the Superintendence, the insurance companies, brokers, and the government. We introduced alternative channels of distribution. Previously, Panama was only a market for brokers. With this law, the companies can now offer services through alternative means of marketing, such as supermarkets and gas stations, for example."

Geared at bringing the sector toward international best practices in terms of supervision, the new insurance law stipulated the creation of a special administrative unit within insurance firms to oversee claims and disputes with consumers. It also heralded the obligatory registry of reinsurers in Panama and shored up basic consumer rights.


Microinsurance has become a potentially lucrative branch for insurers that also bears a lower risk profile. And while still limited in scope, bancassurance and retail outlets entering the fray as distribution points have registered on insurers balance sheets. Central America Data cites Nacional de Seguros as having doubled its customer base by 50% to 80,000 clients following the 2012 Insurance Law provisions on microinsurance. Indeed, according to Munich Re data, microinsurance in Latin America and the Caribbean (LAC) is on a positive trajectory, with 45.5 million beneficiaries in the region as of 2011, 70% of which held life insurance policies. Eleven countries within the region saw a 125% appreciation in microinsurance between 2005 and 2011. Close to 90% of this growth is in Colombia, Ecuador, and Peru. Yet the same research reveals the absence of Panama among the high fliers, as regulatory constraints curbed growth for the period to just 3%.


As Carlos A. Samudio Calvo, General Manager of La Regional de Seguros explained to TBY; “insurance is a face-to-face business, [adding as a caveat that] …we also offer new and innovative products." Indeed, the insurance world to varying degrees is trending toward alternative distribution channels to the familiar branch or broker visit. In its report Digital Distribution in Insurance: A Quiet Revolution, Sigma research concludes that, “Successful insurers will be those who develop a client-centric and digital mindset capable of responding to changes in the market environment and delivering insurance solutions closely related to customer needs."


According to BN Americas, the current expansion of the Panama Canal, in addition to increasing trade, is set to impact insurers. On the one hand, as cargo is unloaded faster during times of peak volume, spoilage rates drop, with insurers facing lower claims. Yet on the flip side, larger vessels involved in accidents will incur far greater one-time losses due to the sheer volume being carried, when the capacity of ships plying the canal's waters rises up to some 13,000 TEUs from around 5,000 TEUs.


According to the Insurance Information Institute, for 2013 overall direct premiums written stood at $1.2 billion (0.03% of the global total) where the non-life print was $965 million, while life premiums amounted to $280 million.

For the year, Panama's leading non-life insurer was ASSA on gross written premiums of $130 million. The firm is controlled by ASSA, a Panama-based financial services group, via subsidiary ASSA Compañía Tenedora. In second place was health insurance provider Internacional de Seguros, established in 1910, on $120.7 million. Third came MAPFRE Panamá, the local arm of the Spanish insurance giant on $87.3 million. Working across life, health and P&C segments, MAPFRE opened its doors in 1967 as Aseguradora Mundial, until 2009, when MAPFRE purchased a 65% stake.

Meanwhile, leading the field among life insurance companies in 2013 were Pan American Life Insurance de Panama on gross written premiums of $83.6 million, Internacional de Seguros on $82.5 million, and MAPFRE on $77.8 million. And in the first five months of 2014 the volume of premiums was at $545 million, nearly $50 million more than in the same period in 2013. Automobiles, with premiums of $94 million, and health, on $91.8 million, saw the greatest rises YoY, respectively up 9.83% and 17%.