Chilean insurance industry shows stability amid challenges
- AM Best projects a stable outlook for Chile's insurance sector due to premium growth and profitability.
- Real growth in the industry reached 8.7% in 2023, mainly led by a surge in life insurance.
- The expected resilience of the market is supported by a strong capital base and improved regulatory standards.
Chile's insurance industry is currently experiencing a stable outlook as reported by AM Best on May 8, 2025. The organization cited premium growth and sustained profitability as key factors supporting this assessment. As of 2023, the country's insurance penetration rate has seen modest growth, outperforming many other Latin American nations, though it still remained below the 5% mark. The insurance market recorded a significant real growth of 8.7% in 2023, predominantly attributed to the life segment, which surged by 15.2%. This growth was mainly driven by increased demand for annuities and pension insurance products. Despite the favorable overall results for the industry, the underwriting results are reported to be on the negative side. This situation is rooted in higher costs across various segments and a notable rise in claims within the life insurance sector. Amidst these challenges, the financial analysts at AM Best point out that the positive net income derived from higher investment income, benefiting from elevated interest rates throughout 2023. Investment income has played a vital role in offsetting unfavorable technical results that the industry has faced. Furthermore, AM Best highlighted that Chile is actively working on strengthening its insurance regulatory framework. Current strategic objectives established by the regulatory body include aligning with international financial reporting standards. The implementation of IFRS 17 is a crucial step toward achieving greater uniformity in accounting practices and financial reporting for insurance entities within Chile. This ongoing reform is significant as it aims to enhance transparency and reliability in the financial information provided by the insurance sector. Overall, AM Best's insights suggest that the Chilean insurance market is well-positioned to navigate current challenges, bolstered by an expanding capital base. Continuous monitoring of developments within the domestic insurance companies will be crucial in assessing their performance moving forward.