Latin American insurance growth is projected to decelerate in 2025, with total insurance premiums in the region expected to grow 3.8% in real terms, down from an estimated 7.6% in 2024, according to a new report from Swiss Re Institute.
The firm explained that while non-life lines have benefited from hard market conditions, life insurance products with savings components have seen gains from higher interest rates. However, these tailwinds are expected to continue supporting growth, although more modestly within some markets.
Swiss Re explained that the regions life and health (L&H) segment is forecast to grow 4.0% in real terms in 2025, down from an estimated 8.0% in 2024, while property and casualty (P&C) premiums, excluding health, are projected to rise 3.3% in 2025, down from an estimated 6.3% this year.
Over the long term, insurance premium growth in the region is expected to outpace economic growth in Latin America (LatAm), continuing a trend seen over the past two decades.
Additionally, Swiss Re also highlighted the significant protection gap in the region, which totaled $151 billion in premium equivalent terms in 2023. Regulatory measures, such as the push for open insurance frameworks, are also anticipated to enhance affordability and expand the insured base.
The firm also expect rates in commercial insurance to moderate. Looking back at the third quarter of 2024, the composite commercial insurance prices index rose 3% in the region, exceeding the global average which declined by 1%. In fact, pricing increases have primarily been driven by casualty lines, particularly motor, due to higher values of vehicles and repair costs.
As well as this, property insurance rates continue to rise on the back of frequent natural catastrophe events. Swiss Re explained that risks from foreign exchange volatility, social inflation in markets like Mexico, and climbing medical costs, could wind up extending then current hard market conditions.
Furthermore, Swiss Re explained that Latin America’s economic growth is expected to decelerate in 2025, with real gross domestic product (GDP) expected to grow 2.2% in 2025, excluding Argentina and Venezuela.
This marks a decline from an estimated 2.5% in 2024. Growth trajectories are set to remain mixed across the region, with Brazil and Chile slowing down to 2% real GDP growth next year, after better-than-anticipated performance this year. Mexico’s growth is expected to remain stable at 1.5%, while Colombia’s economy may improve to 2.4% as inflation falls and monetary policy eases.
The firm went on to note, that while LatAm is expected to outperform advanced economies, its growth will lag in comparison to other emerging markets.
In fact, persistent structural challenges, such as low productivity, aging infrastructure, and fiscal vulnerabilities, continue to constrain long-term economic potential.
Moreover, inflation rates have also declined significantly from 2022 highs, but remain near the upper limits of central bank targets. Consumer price inflation is projected to average 4% in Brazil and 3.8% in Mexico in 2025.
“External economic conditions are becoming increasingly adverse. We expect Latin America’s main trading partner economies, the US and China, to decelerate in the next years. Heightened geopolitical tensions suggest that global trade may face headwinds including supply-side shocks and trade policy hostility,” Swiss Re Institute explained.
Chile and Mexico are both particularly exposed due to their reliance on manufacturing exports to the US and copper exports to China. However, the region is likely to benefit from nearshoring of supply chains amid a longer-term trend of deglobalisation.
