All to Play For


Colombia's insurance sector, like those of many other EMs, tells a familiar story of low penetration, bags of investment potential, and increasing reserve requirements pushing consolidation.

The insurance sector was buoyed in April as finance watchdog Superfinanciera announced a 5.56% YoY growth in profits. The figures were right in line with a Fitch Ratings report from early 2016 predicting premium growth of 6-8% for the full year. The agency went on to forecast a challenging environment for profits due to the highly competitive nature of the sector and the impact of new reserves regulations, not to mention volatility on the capital markets.

But despite pressures, the sector offers solid long-term prospects. A penetration rate of 1.6%—compared to a 6.1% global average—offers plenty of room for growth, as does the large population of almost 50 million. Strong public spending on infrastructure works also offers up strong potential.

The majority of premiums are currently written by local insurers, yet the aforementioned factors have begun to draw the attention of more international players. In 4Q2015 UK-based Lloyd’s announced it was to open an office in Bogotá. The office opened its doors in June, with Chairman John Nelson stating that, “As Colombia realizes its economic potential, insurance and reinsurance can play a key role in supporting this economic growth by improving resilience, taking risks out of the country, and helping the economy recover after catastrophes.” Indeed, a Lloyd’s report found that the country has an underinsurance gap of $570 million against its natural catastrophe exposure. A further Lloyd’s study, the City Risk Index, carried out with Cambridge University, found that Bogotá and Medellí­n will generate “$2.5trillion in economic growth over the next decade but could have $44bn at risk from a series of threats.”

Colombia’s life insurance sector remains relatively nascent compared to its larger non-life cousin, with growing household income rates and improving life expectancy predicted to increase demand in the former going forward. In non-life, growth is likely to come from better distribution networks and product offerings, according to a BMI report. The same report forecasts growth in the non-life insurance premiums from $5 billion in 2016 to $8.6 billion in 2020. In terms of penetration, the report predicts non-life insurance penetration growing a touch from 1.8% to 1.9%. In life, in line with the old maxim that the only way is up, BMI predicts the segment gaining market share and representing 29% of all premiums by 2020. That translates into a growth in life premiums from $19 billion in 2016 to $3.5 billion in 2020.

Back in 2016, and Superfinanciera announced that in April 2016 the most profitable insurer was the local Seguros Bolivar, which hauled in COP41.52 billion over the month. This was followed by Previsora and Alfa, which made COP14.45 billion and COP9.73 billion, respectively. From April 2015 to April 2016, the watchdog also reported an 8% increase in premiums and a 17% rise in registered claims. Overall, the insurance sector’s total volume of assets stood at COP55.4 trillion in April 2016, up COP3 trillion on April 2015 and up COP512.8 billion since March 2016.

All being said, Colombia offers up much the same story as a host of EM insurance markets, but that does not detract from its status as a hot prospect for insurers both local and foreign. Look out for consolidation, the arrival of more foreign players, and an expansion of distribution networks across the country as industry players fight to get more policies into the hands of more Colombians.

You may also be interested in...


Telecoms & IT

Colombia’s IT and telecoms sector and the role of digitalization

IT and telcoms and the digital transformation in Colombia

View More

Energy & Mining

The Next Step

Colombia's oil and gas industry

View More


Sound Advice

Managing risk properly

View More

Green Economy

The Green Wire

Colombia's green economy

View More


A Guiding Hand

The evolving role of the consultant

View More



The changing face of auditing in Colombia

View More
View All Articles