Argentina Insurance Report Q2 2012

Argentina Insurance Report Q2 2012 - new market research report published

Companies & Markets

15.05.2012 13:14:46 - Argentina Insurance Report Q2 2012 - a new market research report on

( - The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year. For much of the last decade, the main themes in Argentinas insurance sector have remained the same. Some are positive. The absolute size of


the economy, and level of per capita income, are such that the country will always be a medium-sized, but emphatically not small, national market. The stabilisation of the economy since the crisis of 2001-02, and subsequent growth have meant that, in absolute terms, premiums have grown rapidly. Often as a result of corporate decisions made in the 1990s, if not before, multi-national insurers are well represented in Argentina. Many of the leading local groups benefit from their association with government-backed financial institutions, from the support of policy-holders who see their own interests as being closely aligned with the mutual insurers who underwrite their risks and/or strong brand names.

The negative factors are also crucial. Both the non-life and the life segments are underdeveloped by many metrics. Argentinas long and complex history of financial instability means that households are reluctant to use life insurance which, by definition, requires a long-term contract between the client and the underwriter of the risk. There appear to be barriers to exit, given that many of the foreign groups who might normally have been expected to focus on the other (numerous) countries – in Latin America and elsewhere – where the commercial opportunities are greater than they are in Argentina have retained a presence. Regulatory changes and policy shifts in the insurance sector – as in the broader financial services industry – are often motivated by economics rather than economic rationalism.

However, we recognise that 2012 may well be a year where Argentinas insurance sector changes dramatically – for better or worse. The actual move by BBVA, and reported decision by HSBC to sell insurance operations in Argentina may be the opening stages in a process of consolidation, rationalisation and improving profitability. Life insurance has been growing very rapidly over the last year or so. In the event that Argentinas economy can continue to expand reasonably steadily through 2012 and 2013 (which is not our current expectation), life insurance may – just – develop to the point where it really plays a key role as a channel for organised savings. Alternatively, there is the possibility that government policies – such as the mandated repatriation of assets that are invested abroad and the recent changes to the rules governing purchase of reinsurance – have unexpected and adverse effects.

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