Peru’s general insurance industry is set to grow at a compound annual growth rate (CAGR) of 7.4% from PEN9.1 billion ($2.3 billion) in 2022 to PEN13.1 billion ($3.3 billion) in 2027, in terms of gross written premiums (GWP), forecasts GlobalData, a leading data and analytics company.

According to GlobalData’s Insurance Database, the general insurance industry in Peru is projected to grow by 6.6% in 2023 and 6.9% in 2024, supported by the growing construction of infrastructure projects and rising demand for health insurance after the pandemic. Further, the increasing frequency of natural-catastrophic (nat-cat) events such as fires and cyclones will support the demand for NatCat insurance products.

Anurag Baliarsingh, Insurance Analyst at GlobalData, comments: “Since December 2022, political and social protests have emerged in the country outraged by marginalization, inequality, and corruption. Property damage due to social unrest and the increased frequency of natural disasters has prompted insurers to reassess their risk exposure. This has resulted in insurers increasing the premium rates for property insurance policies that cover political and war risks by 20-30%. This increase in premium rates helped the growth of the country’s general insurance market.”

Property insurance was the leading line in the Peruvian general insurance market, accounting for a 36.8% share of the premiums in 2022. Property insurance is forecast to grow by 8.9% in 2023, mainly due to the increasing incidents of natural disasters in the country. In 2022, Peru registered 13,167 incidents of fire. In addition, in March 2023, cyclone Yaku caused infrastructure damage worth $323 million.

Baliarsingh continues: “Property insurance in Peru will also benefit from the construction of big infrastructure projects. As per the Ministry of Economy and Finance (MEF), there will be an investment of $19.5 billion in infrastructure and mining projects during 2023-26. As a result, property insurance is forecast to grow at a compound annual growth rate (CAGR) of 7.8% from 2023 to 2027.”

Motor insurance accounted for a 22% share of general insurance premiums in 2022. According to the Automotive Association of Peru (AAP), automobile sales declined by 1.9% in Q1 2023, compared to the same period over the previous year due to a decline in private vehicle sales.

Baliarsingh adds: “An improvement in the economic and political situation in the coming months is expected to drive up vehicle sales, leading to growth in the motor insurance sector. As a result, motor insurance premiums are forecasted to register a higher growth of 4.8% in 2023 as compared to 3.8% growth in 2022.”

Personal accident and health (PA&H) line accounted for a 21.2% share of the general insurance GWP in 2022. PA&H insurance registered a strong growth of 12.8% in 2021 and 7.0% in 2022, due to rising awareness of health insurance post pandemic. Moreover, the limitations of the public healthcare system, such as shortage of trained healthcare professionals, substandard quality of care, and insufficient coverage supported the growth of PA&H insurance. PA&H insurance is expected to grow at a CAGR of 5.79% over 2023-27.

Liability, financial lines, marine, aviation, and transit (MAT), and miscellaneous insurance are expected to account for the remaining 20% share of GWP in 2023.

Baliarsingh concludes: “Rising insurance premiums and a booming construction sector present a positive and consistent growth outlook for the Peruvian general insurance sector over the next five years. However, rising NatCat losses will be an area of concern for insurers.”