According to a new report by Timetric, only 5% of mortgage-free homes, 26.5% of mortgaged homes and a quarter of all cars were insured in 2012. Despite having a well-established regulatory framework, property and motor insurance are not compulsory in Mexico.
Mexico is one of very few countries in the world where motor insurance in not mandatory. However, two Mexican states, Baja California Norte and Jalisco, enacted provisions in January 2012, making motor third-party insurance compulsory for all motorists.
The enactment of these laws is expected to have a significant impact on the overall growth of the non-life segment and will drive the motor category over the forecast period. The steps taken by these two states will speed up the demand for motor insurance in these states. They will also likely encourage other states in the country to adopt a similar line of laws, fuelling the demand for motor insurance.
Opportunities on the horizon in the Mexican housing insurance sector
Furthermore, the Mexican insurance regulatory body has not yet passed compulsory legislation for property owners. Although property insurance is not compulsory in most Latin American countries, higher percentages of insured properties have been recorded due to bank requirements for home owners seeking loans. The low percentage recorded in Mexico offers opportunities for insurance providers to serve the uninsured population.
The industry is therefore expected to grow at a Compound Annual Growth Rate (CAGR) of 8.0%, with written premium rising from MXN296.7 billion (US$22.6 billion) in 2012 to MXN436.1 billion (US$33.2 billion) in 2017.