Government initiatives to invest in infrastructure are set to restore economic growth in El Salvador, which will prove beneficial for the country’s insurance industry. Furthermore, despite the highly competitive insurance environment in El Salvador, the low level of penetration provides excellent opportunity for growth.
Infrastructure Supports Insurance
As a result of its close trading relationship with the US, El Salvador’s economy was significantly damaged by the global recession. Whilst its economy has recorded modest growth since 2010, the government is seeking to stimulate a more rapid recovery through investment in infrastructure. These infrastructural improvements will have beneficial consequences for the country’s insurance industry, and include:
– Development of Cuscatlán International Airport through a public-private partnership.
– A wind farm project in the municipality of Metapán, Santa Ana.
– Development of the country’s coastal region to drive growth in the tourism sector.
Additionally, the Partnership for Growth initiative – signed by El Salvador and the US government to promote sustained economic growth in El Salvador – is set to boost the country’s insurance sector.
Growth In A Competitive Marketplace
The Salvadoran insurance industry is highly competitive, with 21 active insurance companies operating at the end of 2012 – of which the top 10 accounted for 89% of the total gross written premiums. Despite this however, insurance penetration in El Salvador is lower than any other Central American country; this, combined with the increasing awareness of insurance products among the population, renders the Salvadoran insurance industry ripe for growth.