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Insurance premiums in Mexico are set to rise as insurers absorb the impact of a weaker peso and surging inflation, despite previous assurances that efforts are underway to avoid unnecessary hikes.
"Insurers have been looking for places to generate efficiencies," said Francisco Oliveros, CEO of Seguros SURA México in an analysis conducted by local media outlet El Economista.
He added that insurers by and large have been absorbing the higher costs, "but the moment is going to arrive when the cost of the dollar in addition to the increase in [fuel prices] will make it so there will have to be an increase in the cost of policies."
Insurers speaking at recent events held by Mexican insurance association (AMIS) have acknowledged policies are rising for auto and health insurance policies, as both replacement of car parts and medical equipment and medicines frequently involve imports, as reported in El Economista.
Furthermore, Mexico saw general inflation rise to 4.72%, or the highest rate seen in 50 months and driven by fuel price hikes enacted at the start of the year.
Despite the increasingly adverse environment, AMIS has sought to offer reassurances, noting, for example, that most insurers with obligations set in dollars generally have the policies set in that currency, thus generating a neutral impact on the policyholders, according to the report.
Oliveros told El Economista that while the number of claims has not risen, the overall increase in higher prices has forced increases in the costs for repairs and for medical attention.
Igal Rubinstein, directing partner for insurance firm 4P/MX, said there have doubtless been increases in both auto and health policies due to inflation, adding that the insurance industry is virtually dollarized, making higher rates paid in pesos highly exposed to depreciation.
"Being a company of insurance brokers, we have been able to confirm that most insurers raised the price of auto policies," said Rubinstein. "Every company hikes however they want, in the area they want, in certain kinds of cars or in certain coverage, but the reality is that [prices in] the entire market rose."
He added that a full coverage family medical plan issued by a global insurer costs a family of four about US$14,000 per year – again a price generally established in dollars.
El Economista conducted its own informal poll of 238 policy holders as part of its analysis, finding that 48.7% said they saw an increase of 10-15% in their most recent renewal of car or medical insurance, while 18.4% saw a 25-40% increase in premiums since first acquiring their policy.
The poll showed that 17.2% of those polled saw their policies increase recently by more than 40%.