Best Report Notes Growth in Panama Insurance Market

March 16, 2011

A new report from A.M. Best notes that Panama’s insurance market is the largest in Central America, and is expected to continue to produce significant premium growth in the next few years.

Best noted that the “expansion of the Panama Canal, increasing construction activity and tourism development all are positive factors. The market also may benefit from the country’s efforts to increase transparency in its financial and tax laws, as well as from the potential reform of its insurance regulations in 2011.”

Best listed the following facts concerning the country:
— Panama’s insurance market grew by about 9.5 percent in 2009 to PAB847.2 million and by 8.5 percent in 2010 to PAB918.9 million, according to figures from the Superintendency of Insurance and Reinsurance of Panama. [Ed. Note: Panama’s currency the PAB or Balboa is pegged at an equal exchange rate to the U.S. dollar]
— Non-life premiums, including personal accident and health, registered annual growth of 12.9 percent to about PAB686.4 million.
— Premiums in the life market contracted by 2.7 percent to PAB232.5 million—representing the market’s first contraction since 2005. However, declining premium volume in individual life was partially offset by modest growth in the group life market.
— Insurers in Panama rated by A.M. Best Co. generally have demonstrated solid capitalization and favorable operating performance, while also benefiting from their established market share and local market expertise.
— Partially offsetting these factors is the geographic concentration within which these rated companies operate, subjecting them to regulatory and economic risk, as well as competitive market environments.

In addition, Best said it “assigns Panama a Country Risk Tier of CRT-4, indicating concerns with transparency in political, legal and business environments; early stage development of capital markets; and early development of regulatory structures.”

Source: A.M. Best

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