Finance

Knowing Is Believing

Insurance

Insurance penetration stood at 1.3% of GDP in 2011, increasing slightly to almost 1.4% over 2012. While this figure is as high as 3% in neighboring countries, the Dominican Republic’s […]

Insurance penetration stood at 1.3% of GDP in 2011, increasing slightly to almost 1.4% over 2012. While this figure is as high as 3% in neighboring countries, the Dominican Republic’s highly consolidated insurance sector—the top five companies represent 80% of the market and the top three around 60%—is looking to take advantage of the previously untapped retail market.

Infrastructure, property, and health are considered the main growth areas by industry leaders, thanks to increased investment in national infrastructure across the country, a new upcoming mortgage law to spur demand in the housing market, and growth in demand for health insurance as access widens. Increased government attention lavished on the widening SME base is also attracting the attention of insurance firms looking to get involved in small business growth early on.

The top three companies in the sector are Seguros Universal, Insurance Banreservas, and Mapfre. Over 2012, net premiums increased by 9.78% to reach $720.7 million, a continuation of similar growth seen in 2011.

DRIVERS

Calls are increasing for the introduction of mandatory policy lines for infrastructure, an area that is seen as a key growth segment by local insurers. While corporate and property insurance remain the largest segments in the industry, the development of large international projects without insurance signals room to grow. A lagging residential real estate sector will also get a key boost over 2013, in the form of a new mortgage law. The move will likely increase property insurance activity across the country, as new house sales increase. With rising income levels will also come increased demand for health insurance, also an area seen as key to future growth by the country’s insurers.

A more medium-term growth prospect, however, is the country’s burgeoning SME segment. With the government expected to invest around $10 billion in the development of SMEs in the coming years, insurance companies are looking with increasing interest at the area. “We are targeting an expansion of our activities within the micro and SME business segment, which will grow considerably in the near future,” said Executive Vice-President of Seguros Banreservas Osiris Mota. CEO of Mapfre BHD, Luis Gutiérrez, also anticipates growth in this area, telling TBY that, “the SME segment will be a key market in the near future.”

TOP DOGS

Seguros Universal is the largest insurance company in the sector, with a market share of 28%. Boasting an A rating from Fitch, the company is focused on “the life and health segment in particular,” said President Ernesto M. Izquierdo, an area that has grown rapidly in recent years. “Five years ago, this niche represented around 10% of our overall business activity, with the remaining 90% coming from property and casualty,” he continued, concluding that, “the new figures stand at 30% and 70%, respectively.” Mapfre BHD is another significant player, comprising 16.1% of the market according to premiums collected in May 2012. While focused on the corporate sector, CEO Luis Gutiérrez believes the market has yet to fully develop in areas including “civil liabilities, life, and car insurance,” adding that property insurance also remains major line in the market. Rounding off the top three is Seguros Banreservas, which leads the financial deposit insurance segment and has “experienced the highest growth rate in the fire and vehicle insurance segments,” says Executive Vice-President Osiris Mota. He cites a “lack of insurance culture among governmental structures and society as a whole” as the sector’s weakest aspect, but points out that this also “offers future growth opportunities for the industry.” Other markets players include Seguros Sura, with a 10.5% market share. The firm generates almost half of its revenue from fire insurance, while car, life, and health represent the rest. “We have experienced a compound annual growth of 30% in life insurance over the last four years,” said President Carlos Ramón Romero, adding that life insurance now represents 16% of his company’s turnover, compared to only 6% six years ago. Coopseguros is the country’s only cooperative active in the insurance sector, providing policies across a range of areas.

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