Ratings agency AM Best is maintaining a stable outlook on Chile’s insurance market, supported by the market’s resilience on the back of improved dynamics despite global and domestic pressures.
The strengthening of the regulatory framework in the country is also cited by AM Best, which is focused on risk-based capital to protect industry solvency.
Chile is the 5th largest insurance market in Latin America, with a premium volume of $13.3 billion and accounting for almost 8% of all of the business underwritten in the region ($173.6 billion) in 2022, says the ratings agency.
The country’s penetration rate stood higher than most Latin America at 4.3% reflecting the depth and financial flexibility of the market.
However, Chilean insurers’ operating performance and financial strength are still vulnerable to volatile financial markets, global and domestic inflationary pressures, and currency devaluation, warns AM Best.
Chile’s economy has benefited from prompt action by the monetary and fiscal authorities. The normalization of supply chains and stabilization of private consumption have also contributed to the decline in inflation, although forecasts for 2023 are still above the goal set by the central bank.
Recent global and domestic market developments will continue to affect the performance of insurance companies throughout 2023. AM Best will continue to monitor developments in the country’s insurance market, as well as the exposures to natural risks and financial volatility, both domestic and global.
