Latin American non-life insurers are moving into a softer part of the cycle, but they are doing so from a position of relative strength. After two years of pricing adjustments in response to the effects of the pandemic and the inflation shock that followed, the industry is still posting positive margins across much of the region, supported by lower claims frequency in key lines, conservative investment portfolios and reinsurance conditions that remain favorable for cedents.
Fitch Ratings maintains a neutral global outlook for the insurance sector, reflecting its view that insurers remain resilient despite market volatility, slower economic growth, persistent inflation and higher sovereign yields.
In Latin America, Brazil, Chile, Peru and Uruguay continue to carry neutral industry outlooks, supported by expectations that insurers will maintain strong solvency positions and healthy operating profitability despite current economic conditions.
Mexico, by contrast, remains on a deteriorating trend, pressured by higher claims costs linked to regulatory changes affecting VAT recovery, as well as lower yields on short-term sovereign instruments. In Colombia, the outlook remains neutral, underpinned by robust capitalization, although political uncertainty related to the electoral cycle—and its potential effect on investment returns and claims costs—remains an important factor to monitor.
Growth Remains Positive
Premium growth across the region remains favorable, though it is now passed the extraordinary rebound that followed the repricing of recent years. In aggregate, written premiums in the markets under review rose from US$204.1 billion in 2023 to US$232.2 billion in 2024 and US$245.1 billion in 2025.
By scale, Brazil, Mexico and Chile continue to lead the regional market, with written premiums of US$139.6 billion, US$50.4 billion and US$17.8 billion, respectively, in 2025. More recently, Chile, Mexico and Colombia stood out among the largest markets, posting growth of 15.7%, 12.0% and 8.9%, respectively. Brazil and Uruguay grew by less than 2%, a pattern consistent with markets facing greater competitive pressure.
In Brazil’s specific case, however, the industry’s muted growth was also affected by the introduction of the financial transactions tax on accumulation products, particularly unit-linked savings insurance. Excluding that line of business, industry growth would have been closer to 10%.
The slowdown reflects a softer market than many insurers had anticipated for 2025. In lines such as property, pricing has eased as reinsurance conditions improved, while policy counts have remained relatively stable, limiting nominal growth in a segment that represents about 11% of written premiums in the regional sample. At the same time, average insurance penetration in Latin America stands at roughly 3.4%, still far below the approximately 10% penetration rate seen in developed economies, leaving the region with a long structural runway for growth.
Results Remain Favorable With Major Country Differences
Earning resilience remains one of the strongest parts of the regional story. The technical improvement built over the past few years, especially in motors, together with lower claims frequency in several jurisdictions, has helped sustain profitability even as competition has intensified.
In 2025, Peru, Panama, Brazil, and Colombia posted the strongest aggregate loss ratios among the main markets analyzed, at 39.4%, 55.14%, 65.5%, and 68.0%, respectively. When expenses are included, Peru and Brazil still rank among the strongest performers, while Panama also showed a favorable technical profile, albeit on a smaller scale.
At the other end, Chile, Mexico and Uruguay faced greater technical pressure. Chile posted an aggregate loss ratio of 89.6%, Mexico 81.3% and Uruguay 74.4%. In Chile, the aggregate reading is influenced by the weight of pension-related business; in Mexico, by higher claims costs; and in Uruguay, by pressure in specific businesses such as agriculture and pensions.
Consolidated results should be interpreted with caution, as several markets include composite insurers, and the weight of life business can distort the technical reading of P/C performance. For that reason, the motor and property lines provide a clearer signal of underwriting discipline and competitive dynamics.
From that perspective, 2025 was generally favorable: the motor loss ratio declined by about 1% on average versus 2024, with the largest improvements in Peru and Chile, at close to 1.5%, while Colombia and Brazil posted more modest reductions of around 0.4%, considering that both had already shown more pronounced improvements in 2024. In property, the loss ratio fell by around 4% on average, supported by a lower incidence of severe events.
Mexico was the main exception: there, the motor loss ratio rose by 1.2% and the property loss ratio by 2.4%, affected by the VAT effect and by higher claims linked to hydrometeorological and climate-related events.
Returns on equity also show relevant dispersion. In 2025, Mexico, Peru and Brazil posted ROAE of 20.1%, 19.5% and 19.2%, respectively, among the highest in the sample. Colombia fell to 12.4% from 17.0% in 2024, while Chile improved by 1.3 percentage points to reach a 14.7% ROAE at year-end.
Better Cost Control Is Helping
Efficiency gains have also supported results. Greater automation in underwriting, pricing and claims handling, together with broader use of technology, is helping insurers contain costs and strengthen competitiveness.
In 2025, Mexico, Chile and Brazil posted some of the lowest expense ratios among the main markets, at 22.9%, 23.9% and 24.8%, respectively. Colombia stood at the opposite extreme, at 51.53%. In other words, the regional trend points to greater efficiency, but local rigidities remain strong enough to pressure profitability in some countries.
Investments Cushion Political, Financial Volatility
The region faces a heavy political calendar, with election cycles that could increase volatility in local financial markets. Even so, non-life insurers continue to maintain conservative investment profiles, consistent with the liquidity and low-volatility needs of short-tail business. Fitch notes that most insurers in the region maintain high-quality investment portfolios, with a large share concentrated in government securities or bank-issued instruments, whose risk is also closely tied to sovereign risk.
Still, from an international perspective, the credit risk carried by the region can be viewed as relatively high because of the heavy concentration in local instruments, and especially sovereign debt. That bias reflects both regulatory limits and requirements and the cost of hedging currency risk when investing abroad.
Plenty of Room to Grow
Beyond the short-term cycle, the structural case for the sector remains unchanged: Latin America is still underinsured. Total insurance penetration stands at 6.1% in Brazil, 5.0% in Chile, 3.6% in Colombia, 2.8% in Mexico, 2.6% in Panama, 2.1% in Peru and 1.2% in Argentina. Brazil leads the region, although its figure includes large-scale health business, while Chile’s ratio is lifted by the weight of pension-related business.
Mandatory insurance supports penetration in several markets, while labor informality and low banking penetration work in the opposite direction. Mexico, Colombia and Peru show estimated mandatory insurance shares of 20.0%, 19.2% and 15.0%, respectively.
Within non-life, Chile ranks among the markets with the highest penetration, supported by fire and earthquake-related coverages. Mexico, Colombia and Peru, by contrast, still offer meaningful room for expansion in markets shaped by higher informality and lower financial inclusion.
Reinsurance Supports Capital Protection
Reinsurance remains one of the region’s key supports. Fitch expects the global reinsurance market to remain soft in 2026, particularly in property catastrophe, driven by ample capacity and intensifying competition.
In Latin America, reinsurance activity is essential, and usage trends are higher than in developed markets. In 2025, property retention stood at 30.4% in Chile, 35.0% in Colombia and 38.2% in Mexico, reflecting local insurers’ significant need for capacity or their relatively low risk appetite.
Brazil, meanwhile, has historically posted higher premium retention than other countries, owing to the lower incidence of large catastrophes and broader geographic diversification. Even so, it recently introduced Insurance Risk Notes (LRS), which allows risk to be transferred to the capital markets as an alternative to reinsurance.
In practice, while the region’s heavier use of reinsurance increases its reliance on international capacity and also raises counterparty risk exposure, it has significantly reduced retained loss severity, providing stronger capital protection for local insurers, particularly in catastrophe-exposed business.
The protection gap, however, remains structural. Based on the industry data reviewed, only about 13% to 20% of economic losses are insured in the region. Chile’s 2010 earthquake and Hurricane Otis in Mexico in 2023 illustrate the point. Although their economic losses were estimated at roughly US$30 billion and US$16 billion, respectively, the impact retained by insurers was far smaller because of extensive reinsurance use. In Chile, the insured cost represented about 4.4% of sector equity, while in Mexico Otis amounted to 17.4%.
No Immediate Threat to Stability as Market Softens
For the second half of 2026, the most likely scenario remains one of intense competition and no sign of imminent hardening in international reinsurance. Fitch expects the global reinsurance market to remain soft, particularly in property catastrophe, unless an exceptionally severe loss event changes the picture.
For Latin America, this points to a gradual stabilization in non-life pricing, still with pressure in some lines but without an abrupt deterioration in fundamentals, as the insurance sector in the countries analyzed maintain robust capitalization levels.
The combination of positive margins, lower claims frequency, meaningful reinsurance protection, and conservative investment portfolios should allow the sector to maintain a reasonably strong financial position. If underwriting discipline is sustained, the next phase of the cycle will likely not be another sharp decline in prices, but rather a clearer stabilization during the second half of the year and possibly modest rate adjustments by early 2027.
Regarding the effect of international events on the performance of the markets analyzed, Fitch believes the region remains relatively protected and that the risk of uncontrolled inflation is lower. However, a prolonged geopolitical conflict and more severe shocks to supply chains and energy markets could put pressure on claims inflation, which would affect the P/C segment more intensely given the nature of those businesses.
Topics Carriers Profit Loss New Markets Pricing Trends Property Casualty
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