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Colombian insurance opportunities

Part of this recent growth has been the result of engineering free trade agreements with the world's major markets, establishing the nation on the global stage.

Colombia has been reaping the benefits of an improved security situation and macroeconomic credibility, with the country recently securing investment grade status from the major credit-rating agencies.

On July 29th Moody’s Investors Service, the credit rating agency, increased Colombia’s sovereign rating from Baa3 to Baa2 giving it the same rating as Brazil. The ratings firm added that the outlook is stable.

According to Moody’s “sound fiscal management, “moderate fiscal deficits” and “strong growth dynamics” have contributed to the credit upgrade, demonstrating economic growth of 6.4% in the first quarter of 2014 (1).

The population of Colombia is also relatively youthful, therefore unlikely to encounter the problems faced by developed economies as a result of increasing longevity. A report published by Ernst & Young in 2012 states that 26.2% of the population is aged 15 or under while just 6.6% are aged over 65 (2)

Improvements in the country have made it more attractive for foreign investment, which naturally has impacted the insurance field. Insurance premiums by the end of 2004 were USD2.4b, with 37% life and 53% nonlife. In 2013 premiums were USD10bn, 48% corresponding non-life and the remaining 52% to life and social security lines.

The legal situation

Colombia is fairly sophisticated in terms of insurance structure and preferences.

The Colombian Market has, in general, been well protected. Companies are run professionally and regulators are focused on the solvency and liquidity of the players. While there have been some large claims, none of these have caused insolvency or liquidation of insurance providers.

As a result of an open market, international companies are very welcome in the country and currently they have a market share of around 63%. In most cases it is possible for individuals and businesses to purchase insurance with foreign providers.

Several new companies are in the process of having licence applications approved, providing additional proof of the attractive nature of the Colombian insurance market.

Clients select the insurer not based on nationality but solvency, characteristics of the products, quality of service, claims payment reputation and of course price. However, a local presence is very preferable to Colombian clients, many of whom are not so inclined to purchase insurance abroad due to the difficulty in getting in touch with an international provider.

By law, foreign insurers can offer international marine cargo, aviation and satellite insurance in the country but they have to be registered in the Colombian Registration form abroad (RAIMAT).

Colombians are legally entitled to purchase any insurance abroad with the exception of Social Security related products, mandatory insurances, or any insurance where the insured or beneficiary is a Public Entity.


The purchase of reinsurance is triggered by the same variables as insurance.

There is no local reinsurer in Colombia, leaving plenty of opportunities for international players.

Many areas exist where the support of reinsurance is required and this is due, among other things, to the solvency regime imposed on insurance companies and to the maximum net retention admissible that is 10% of the net equity.

As a consequence, lines with catastrophic exposure such as earthquake and surety require significant reinsurance support. Agriculture requires reinsurance for similar reasons and all sectors benefit from the technological transference that an expert reinsurer could bring to the table.

Where we stand

Markel entered the wider Latin American market in 2013 following the acquisition of Alterra Capital Holdings Limited by Markel Corporation.

The Colombian book consists of 60% Property, 30% surety and 10% in other lines such as casualty and marine. Business is written on proportional and non-proportional basis.

We see plenty of opportunities in areas such as surety and related lines due to the commitment of the country to properly develop the infrastructure that is required for continued growth and prosperity.


(1) Financial Times article - 29/07/2014 

(2) Ernest & Young Latin American Insurance Outlook 2014