Change in the Air


The growth of Ecuador's middle class and recent changes to the regulatory environment have created a range of new opportunities for international companies in the insurance sector.

Since the dollarization of the economy in 2000, the insurance sector in Ecuador has seen remarkable growth, and the country is now one of the fastest-growing and most competitive insurance markets in Latin America. The market is now worth close to $1.3 billion, up from approximately $200 million in 2000. Over the past five years, the insurance sector has seen double-digit growth, with the exception of 2009, and is now the third fastest-growing market in Latin America after Brazil and Peru, according to market intelligence firm Latino Insurance. After surging ahead with 21% growth in 2011, analysts are expecting growth in the insurance market to level out at 15% for 2012.

Although growing quickly, the insurance market in Ecuador remains comparatively small, making up less than 1% of the sector in Latin America. Over the past five years, insurance has grown as a percentage of Ecuador’s GDP from 1.5% to 2%, still trailing the regional average of 2.7%, and well behind market leaders such as Chile and Peru, where premiums are worth more than 4% and 5% of GDP, respectively, according to Latino Insurance. The market still has relatively low penetration rates, although the past three years have seen premiums per capita rise from $67.27 in 2009 to $92.29 in 2011, and premiums per member of the economically active population rose from $158 to $290 over the same period. Throughout 2010 and 2011, this figure has grown at an average rate of 16.9% annually.

Although the insurance market in Ecuador is comparatively small, it is highly competitive, with 44 private insurers operating in the market. Of these companies, 22 (63% of the sector) offer both life and non-life insurance, generating $836.7 million in premiums in 2011; 14 (28.4% of the sector) operate only in the non-life insurance market, and made $390.8 million in premiums in 2011; and 8 (8.3% of the sector) operate exclusively in the life insurance market, and made $109.1 million in premiums in 2011. However, the market is far from concentrated—it is the third-most atomized market in Latin America, behind Argentina and Chile. The leading company in the market, QBE, has just a 15% share. Furthermore, the five largest insurance companies combined only account for 35% of total premiums in the market. Out of these top five companies, three—including QBE—are foreign owned. As measured by premiums earned, the nine global insurance companies operating in Ecuador accounted for 31% of the market in 2011, with six regional companies making up an additional 6%. Among the local companies that comprise the remaining 63% of the market, Equinoccial is the largest, with just over a 10% share of the market by premiums.


The market is highly focused on credit-linked insurance products, with automotive insurance making up, by far, the largest segment of Ecuador’s insurance market and accounting for 26% of premiums collected in 2011. Following behind are group life insurance, which comprises 15.5% of the market, and fire insurance, which accounts for an additional 9%. Together, these three lines account for just over half of all policies in Ecuador (nearly 51%), according to the Superintendent of Banks and Insurance. Personal accident, transport, and surety bonds are also large segments of the market, comprising an additional 18%.

In general, commercial property and casualty insurance remains a strong segment of the market, and as the government continues its push to invest further in infrastructure, energy, and health care, segments such as transport and surety bonds look set for further growth. As Francisco Proaño, General Manager of Panamericana Seguros y Reaseguros, explained to TBY, “the largest businesses needing coverage [in Ecuador] are in the public sector.” Although the large size of policies in this segment has traditionally made it the preserve of state-owned insurers, the continued consolidation of private insurance companies has led to increased capacity that may allow private insurers to play a larger role in these types of projects.

Despite the dominance of commercial and group policies, personal lines are a fast-growing portion of the insurance market. In 2011, the personal segment grew by 25%, compared to 20% for the overall insurance sector. According to Martha Tufiño, General Manager of Equivida, “every year, personal insurance adds one point against general insurance. The latter has been losing a point every year in participation… personal forms of insurance represent the biggest opportunity [in Ecuador].” Much of the growth in the personal segment is the result of increasing incomes and growing wealth in Ecuador. As Tufiño explained to TBY, “the development in the economy has resulted in a middle class with higher purchasing power.” There has also been a cultural change regarding insurance, according to Tufiño. “Nurturing this culture is part of the potential of the insurance market. It is being built through compulsory insurance and through banks asking for policies… Ecuadoreans are learning more about the importance of having insurance.” The compulsory sector of the market is still small. Third-party automotive insurance only became compulsory in 2008, with the passage of a law on Compulsory Insurance for Transportation Accidents (SOAT), and currently represents just 4% of the insurance market. As Tufiño notes, “In the individual area, there is still a lot to do.” To encourage this cultural change, and in anticipation of the growth of the personal segment of the market, many companies, including Equivida, are making efforts to expand and diversify their lines of personal insurance products. According to Tufiño, “personal insurance has grown from 4% to 13% [of our portfolio]. We expect to end 2012 with a 20% participation rate, mainly targeted at the middle class of the country.” Mapfre Atlas, a new player in Ecuador, is also making moves to expand its personal portfolio. As the company’s General Manager, Rafael Suárez, explains, “since the arrival of Mapfre, we have started analyzing the needs of Ecuadorean customers, and we noticed that every company was offering the same products. We thus decided to launch two new car insurance policies for individual customers… our plan is to segment the market and contribute with different products.”


A number of changes to the regulatory framework in Ecuador have led to a shake up in the insurance sector. The two most notable changes are the anti-monopoly law passed in 2011 and the move to implement Solvency II standards for the insurance industry (based on EU directives). The main change brought about by the anti-monopoly law is through its requirement that financial institutions divest themselves of any business within the insurance sector. In 2011, bank-linked insurers represented 36% of the market, and were important contributors to growth. The move to implement Solvency II standards will also place significant new technical and financial requirements on insurers in terms of accounting procedures, capital adequacy, and risk management. The combination of these reforms is expected to lead to considerable consolidation in the market, as both bank-linked insurers and smaller insurers that are not ready to meet the Solvency II requirements look for sources of capital and know-how. Rafael Suárez believes this will bring “opportunities for insurance businesses that are committed to growth.” Many industry analysts expect to see an increased number of regional and international insurers entering the country to take advantage of this change in the market. This will be a boon for both the insurance industry and Ecuadorean businesses. As Francisco Proaño explains, “every business in Ecuador is seeking a global insurance company… These global companies have larger capacity for subscribing risks in Ecuador.” Overall, this trend presents significant opportunities for investors.


Due to the high atomization and comparatively small size of the Ecuadorean insurance industry, most companies suffer from a relatively low level of capitalization. As a result, the industry has usually seen very high levels of reinsurance and risk transferring—around 60% over the past decade. However, Ecuador has only two domestic reinsurers, meaning that the majority of reinsurance takes place with international firms. Over the past decade, this rate of reinsurance has gradually fallen, from around 62% in 2002 to around 58% in 2011. This trend is expected to accelerate as more international players enter the market and the industry continues to consolidate. The recent increase on the tax on outward foreign exchange is also expected to contribute to this decline, although it may lead to a resurgence in the domestic reinsurance market.

You may also be interested in...



AI in Agriculture

How AI in agriculture could help farmers in Ecuador boost yields and profits.

View More


Ecuador Fighting Crime

How is the country improving policing and security?

View More

Telecoms & IT

Catalytic technologies for business growth

Cloud and cybersecurity

View More


Latin America MICE Tourism

COVID-19 and Work Travel

View More


Ecuador’s Banana Trade

COVID-19 and Disruption

View More

Energy & Mining

COVID-19 in Ecuador

The Future of Mining

View More

Telecoms & IT

4G Connectivity 2021

Telecommunications & Technology

View More


Invest Ecuador Tourism

Flight Connectivity and FDI

View More


Ecuador’s Mining Boom

Major Deposits Promise Riches

View More
View All Articles