PENETRATING PANAMA

Panama 2018 | FINANCE | FOCUS: INSURANCE CONGRESS

An insurance summit on the Isthmus could be the impetus Panama's insurance market needs to resolidify growth.

The Panamanian Association of Insurers is hosting the 27th annual Insurance Congress in the region in October 2018. Major themes up for discussion at the event include technology disruptions, opportunities, and challenges in the insurance sphere as well as ways to increase insurance penetration.

In a regional insurance market analysis from Spanish insurance company MAPFRE, the company measured nominal insurance market growth at 0.5% in 2016, while the market actually contracted in real terms by 1.1%. For the same year, premiums totaled almost USD1.4 billion. Non-life premiums make up three-quarters of this, but life insurance premiums saw a 5.5% real YoY increase.

While the average insurance penetration rate across Latin America has grown steadily in recent years, Panama's penetration rate plateaued between 3 and 3.5% before beginning its descent in 2010. Now penetration stands at 2.5%. In contrast, the Latin American average is now slightly above 3%. Panama's penetration rate puts in seventh in the region, just behind Colombia and ahead of Uruguay. Indeed, Sagicor told TBY that the two main challenges in Panama are opening new distribution channels and penetrating the mass market. To help with this Sagicor is working to better its products and services. The noteworthy new product is a full universal life product, which will be supported by better software and services. The goal is to reach the 3.8 million Panamanians without individual life insurance policies. For Somos Seguros, this extremely small market makes Panama unique and means insurance providers must be highly diversified as the market is not large enough for niche segmentation.

The insurance congress will also seek to highlight technological developments in the insurance market, such as insurtech. In the UAE, insurtech is already making waves in the insurance industry and is helping cover people who cannot afford conventional policies. With the Dubai Chamber of Commerce and Industry announcing plans to set up its second Latin American office in Panama, the opportunities for knowledge sharing in this field are opening up. The UAE shares many similarities with Panama, as it is a small country with low penetration rates. Increasing cooperation between the two countries could open up the insurance market in new ways, catalyzed by October's highlighted insurance summit.