Global Insurance Report 2023: Capturing growth in Latin America

Latin America’s insurance market is a fertile territory for accelerated growth and business model innovations. It is already the fastest-growing regional insurance market globally—in both life and nonlife segments—and it’s among the most profitable markets for insurers globally. However, several structural challenges, such as a fragmented market and socioeconomic factors, persist. For the region to fully bridge the gap between its current insurance penetration levels and those of more-mature markets worldwide, insurers in the region will need to identify their unique path to profitable growth.

As more consumers in Latin America gain access to the tools of developed markets, such as bank accounts and smartphones, insurance becomes both more accessible and more necessary. And as insurers seek growth and efficiency, leaders are increasingly asking bold questions about what products could meet the demands of underserved populations.

Recognizing the significance of addressing these challenges, this report—the first geography-focused edition of the Global Insurance Report—offers actionable recommendations to global, regional, and local insurers, as well as to policy makers, regulators, and industry stakeholders, to navigate the complexities of Latin America’s insurance market.

Central to the findings is the remarkable growth trajectory that the Latin American insurance sector has embarked upon. The region’s growth is emblematic of its undertapped potential and underscores the urgency for insurers to adapt and innovate. Six imperatives stand as pillars to fortify the performance of the Latin American insurance sector:

Expand and rethink the product portfolio
Personalize and digitize customer interactions
Aim for operational excellence
Enhance distributor experiences
Engage with ecosystems and develop new business models
Close the inequality gap and promote economic development
From bolstering operational efficiency to bridging the penetration gap, these imperatives serve as a strategic road map for insurers seeking to thrive in this burgeoning market.

Insurers recognize that the intricacies and idiosyncrasies of the regional landscape are well-positioned to capitalize on the expanding growth opportunities by aligning their strategies with the imperatives that will enable a significant step forward in the region. Insurers that do so can proactively embrace change, ensuring a robust and sustainable trajectory in the face of evolving industry dynamics.

ABOUT THE AUTHOR(S)
Christopher Craddock is a senior expert in McKinsey’s São Paulo office, where Roberto Marchi is a senior partner; Jaime Morales is a partner in the Medellín office; Salomon Spak is a partner in the Lima office; and Sergio Waisser is a senior partner in the Mexico City office.

The authors wish to thank Lino Abram, Pedro Barreto, Ricardo Bernal, João Bueno, Duarte Carvalho, Alvaro Cubria, Carlos Fernandez, Carlos Fucci, Santiago Gazzo, Rui Neves, Jose Miguel Novo, Martim Vaz Pinto, Jaime Reategui, Alejandra Terrones, Bruno Tocagni, Federica Torres Sakai, Javier Valenzuela, Fayet Valles, Valeria Vargas, and Felipe Villarreal for their contributions to this report.

Fonte: mckinsey.com