The Mexican general insurance industry is set to grow at a compound annual growth rate (CAGR) of 7.7% from MXN402 billion ($20 billion) in 2022 to MXN 581.7 billion ($26.8 billion) in 2027 in terms of gross written premiums (GWP), driven by a recovery in automobile sales and rising medical costs that are pushing demand for private health insurance, forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Insurance Database, the general insurance market in Mexico witnessed a drop in growth to 8.9% in 2022, compared to 11.2% in 2021. With the inflation rate touching a two-decade high in 2022, consumers were forced to purchase only essentials and cut down on other expenses, leading to a decline in the growth of general insurance in 2022.

Personal Accident and Health (PA&H) insurance was the leading line of business in the Mexican general insurance industry, accounting for a 32.9% share of the GWP in 2022. It is expected to register 10% growth in 2023, driven by increasing medical costs, which are leading to higher sales of health insurance policies. High medical inflation of 17% in 2022 has made health treatments costlier, supporting the demand for health insurance.

Sutirtha Dutta, Insurance Analyst at GlobalData, comments: “The rise in insurance awareness after the pandemic is also supporting PA&H insurance growth. Moreover, the government’s decision to close Seguro Popular, a program aimed to guarantee universal access to health services, in 2020 and replace it with other schemes has impacted 53 million people. This is prompting people to buy private health insurance in the absence of other alternatives. Against this backdrop, PA&H insurance is expected to grow at a CAGR of 9.9% over 2023-27.”

Motor insurance accounted for a 30.1% share of the general insurance industry’s GWP in 2022. According to the Mexican Automotive Association (AMIA), vehicle sales increased by 7% in 2022 as compared to 2021. The trend continued in 2023 where the vehicle sales registered a growth of 24.4% in the first quarter of 2023 as compared to the same period of the previous year. This will further support the growth of motor insurance, which is expected to grow at a CAGR of 6.9% during 2023-27.

Property insurance is the third largest line of business and accounted for 19.7% share of the general insurance GWP in 2022. The growth in property insurance is driven by the continued investment in infrastructure projects and the country’s vulnerability to climate change, leading to a rise in catastrophic events. Property insurance is expected to grow at a CAGR of 5.4% between 2023 and 2027.

Financial Lines, Liability, Marine, Aviation and Transit, and Miscellaneous accounted for the remaining 17.3% of the general insurance GWP in 2022.

Dutta concludes: “High medical expenses, growing automobile sales, and investment in infrastructure projects will continue to support the growth of the Mexican general insurance market over the next five years. However, high inflation and increasing claims from natural calamities will have a negative impact on the profitability of general insurers.”