The insurance sector in the country: growth and opportunities

The insurance sector in the country has experienced significant growth in recent years, surpassing even the pace of the national economy, although it still represents a small percentage of the Gross Domestic Product (GDP), standing at around 2%. This disparity between the development of the insurance sector and its presence in the economy has been pointed out by experts as an opportunity to close gaps and expand protection to underserved sectors, as mentioned by Alberto Vásquez, general manager of La Positiva Seguros. Despite this growth, insurance penetration remains uneven, with a greater presence in large and medium-sized companies, corporations, and high-income individuals, while the most vulnerable segments, low-income clients, and microenterprises, have limited access to these protection services. This disparity highlights the growth opportunity in sectors that are not yet covered by insurance. Among the insurance lines with the greatest growth potential are life and health insurance, with life insurance representing half of the total insurance in the country. In this sense, a product that has experienced significant growth in the last year is private income insurance, which has reported an annual increase in premiums of over 90%, amid the reduction of pension funds due to withdrawals by affiliates. This increase in the hiring of private income insurance is attributed to various factors, such as affiliates who retire and have a significant portion of their pension fund available, as well as individuals seeking long-term investment options. Additionally, the renewal of incomes contracted in previous years has contributed to this growth, with contract terms ranging from five to 10 years, with seven years being the most common. For this year, it is expected that the life insurance line will experience double-digit growth, exceeding 10%, while general lines would have an increase of less than 10%. Regarding the change in the investment portfolios of insurance companies, there has been an advancement in real estate participation, with a significant increase in investments in this sector in recent years. The preference for direct investments in real estate development, rather than through other instruments, responds to the strategy of matching with long-term products offered by insurance companies. This diversification is reflected in the focus on offices, commercial spaces, restaurant spaces, retailers, logistics sector, and industrial parks. Regarding the recent pension system reform, although there is a possibility for insurers to participate in the management of pension funds, this option is not currently being considered. However, work is being done on the development of new insurances for provinces and underserved segments, such as catastrophic agricultural insurance and telemedicine plans, as well as expanding the offer with credit life insurance for young people and credit products. In summary, the insurance sector in the country presents a landscape of growth and opportunities, with a push towards product diversification and expanding protection to currently underserved sectors. The positive evolution of life insurance and the increasing investment in the real estate sector reflect a trend towards expanding coverage and adapting to the changing needs of the insurance market in Peru.