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The Latin American non-life insurance market will almost double in size over the next five years, according to a survey by management consultant Datamonitor.
In the six countries that account for more than 90% of Latin American non-life insurance premiums-Argentina, Brazil, Chile, Colombia, Mexico and Venezuela-premium volume will nearly double to $38.04 billion in 2001 from $20.85 billion in 1996, Datamonitor predicts.
The average rate of growth in general insurance premiums in these countries will be 12.8% annually, led by Venezuela, with 17.6% annual growth, and Brazil, with 15.1%.
In its study, Datamonitor says prospects of such growth rates have attracted the attention of international insurers, which already have established operations in these countries, helped by the opening of national markets to foreign investors and the relaxing of controls on foreign ownership.
Mexico has been a particular target of international insurers since signing the North American Free Trade Agreement. Foreign entrants now account for 25% of Mexico's market, and the proportion is increasing as more companies such as AEGON Insurance Group, Aetna Inc., American International Group Inc. and Allianz A.G. Holding increase their involvement, says Datamonitor. "This trend is to be duplicated in other countries as the rich rewards to be reaped attract more international companies," it adds.
Datamonitor analyst David Romani says: "It is not surprising that foreign insurers are rushing into Latin America. The very high growth predicted for the next five years means that the potential rewards are huge."
He said it is only necessary to look at figures showing the low penetration of insurance in Latin America-general insurance premiums per capita are under $100 in all countries compared with almost $1,400 in the United States-"to realize that the scope for growth is tremendous."
Copies of the report, "Insurance in Latin America," are available for $3,995 from Datamonitor, 41 Madison Ave., Fifth Floor, New York, N.Y. 10010; 212-661-2525.