Non-life insurance in Venezuela grew by US$100m between 2010-2014

27 Sep 2016

Venezuela’s non-life segment grew from VEF 19.0 billion (US$5.1 billion) in 2010 to VEF79.3 billion (US$5.2billion) in 2014.

Venezuela’s non-life segment grew from VEF 19.0 billion (US$5.1 billion) in 2010 to VEF79.3 billion (US$5.2billion) in 2014. As shown from the increase much smaller increase in the size of the industry in terms of US dollars, the rising inflation in Venezuela over the past few years has inflated the sector’s premiums. Nevertheless, there was a real increase in construction and commercial insurance and third-party motor insurance was made compulsory in 2011.

Political instability threatens economic projects

The Venezuelan government under Nicolas Maduro is facing rising levels of unrest as the country becomes ever more embroiled in hyperinflation that is causing food shortages as well as shortages of other goods such as medical equipment. Under these dire economic conditions, the viability of many of the construction projects it has undertaken is in doubt. These projects have, during the review period (2010-2014), driven growth in property insurance. In 2011, the government implemented the Great Housing Mission to support individuals affected by heavy rain and floods. When launched, the initiative planned to construct three million new homes by 2019. In October 2015, the Ministry of Housing announced that there had been 739,154 units built so far. 

Continuing low oil prices will dampen investment 

The fall in oil prices coupled with the Venezuelan government’s commitment to using oil revenues on social spending, as opposed to reinvestment meant that oil related construction projects were not as high as originally forecasted in previous years. The continuation of low oil prices is unlikely to encourage any major exploration projects soon and so may dampen insurers’ prospects in construction and liability lines.

This information is based on a Timetric insight report which can be found here: Non-life Insurance in Venezuela - Key Trends and Opportunities to 2019

Source: Company Press Release