Best’s Market Segment Report: AM Best Maintains Negative Outlook on Colombia’s Insurance Industry

JANUARY 09, 2025 11:35 AM (EST)

Best's Market Segment Report: AM Best Maintains Negative Outlook on Colombia's Insurance Industry

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MEXICO CITY - JANUARY 09, 2025 11:35 AM (EST)
AM Best is maintaining its negative outlook on Colombia's insurance industry, citing challenging economic conditions and political uncertainty.

According to the new Best's Market Segment Report, "Market Segment Outlook: Colombia Insurance," the country's economy has grown significantly in recent years. However, economic development has been pressured by global economic conditions, as well as persistent elevated interest rates and labor market deterioration. In addition, a change in Colombia's leadership in 2022 has created uncertainty with respect to the government's ability to stabilize the country's fiscal situation.

"Although the Colombian insurance market grew by 10.4% year over year as of October 2024, it still recorded a negative technical result," said Olga Rubo, financial analyst, AM Best. "The claims rate is recovering after being affected by the residual impacts of the pandemic, and inflation, despite the weakening of the Colombian peso in 2024, remains high, impacting medical costs and the cost of automotive spare parts."

According to the report, fraudulent activities, such as false claims and insurance scams, pose a threat to the industry's stability and profitability as well. "Insurers must remain vigilant in implementing robust fraud detection and prevention measures to safeguard their operations and maintain consumer trust," said Rubo.

Mitigating factors to the negative outlook include appropriate regulatory measures and healthy solvency ratios throughout the industry. Colombia's regulations protect balance sheets by establishing minimum rating requirements for issuers to cover technical reserves and setting limits on issuer concentration.

To access the full copy of this market segment report, please visit http://www3.ambest.com/bestweek/purchase.asp?record_code=350277.

To view current Best's Market Segment Outlooks, please visit http://www.ambest.com/ratings/RatingOutlook.asp.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.