Colombia Insurance Companies Industry Report and Guide

The Colombian insurance market is a growing industry, with a total premium income of $13.8 billion in 2020. This represents a significant increase from the $8.6 billion reported in 2015.

Colombia's insurance market is largely dominated by a few major players, including Grupo Aval, Sura, and Sura Asset Management. These companies account for over 50% of the market share.

The Colombian government has implemented various regulations to promote the development of the insurance industry. For example, the Superintendencia Financiera de Colombia (SFC) has introduced new rules to increase transparency and improve risk management practices.

The Colombian insurance market is expected to continue growing, driven by increasing demand for health and life insurance products.

Colombia's insurance market is highly competitive with 44 insurance companies operating in the country. The top three insurance companies in Colombia are Santander, BBVA, and Grupo Sura, accounting for over 40% of the market share.

The Colombian insurance market is also heavily influenced by the government's regulatory policies, with the Superintendencia de Sociedades (Superfinanciera) overseeing the industry. This regulatory body has implemented various measures to strengthen the market, including the requirement for insurance companies to maintain a minimum capital requirement.

The Colombian insurance market is expected to continue growing, driven by increasing demand for health and life insurance products.

The Colombian insurance market is experiencing a significant shift, with leading financial conglomerates expanding into Latin American and Central American markets through acquisitions. Grupo Sura's 2015 acquisition of Royal Sun Alliance's Latin American insurance business for $614m is a prime example of this trend.

This move not only solidified Grupo Sura's position in the region but also gave them a foothold in key markets like Chile and Uruguay. They've also become a notable player in Brazil and Mexico, two of the continent's largest economies.

Colombian banking and insurance groups are using the experience and business models of acquired firms to boost their domestic insurance business and increase market share in Colombia. This strategic approach is allowing them to expand their reach and stay competitive.

The acquisition of Confianza by Swiss Re in 2014 is another example of foreign players entering the Colombian market through strategic partnerships. This move allowed Swiss Re to tap into Confianza's expertise in infrastructure project insurance, such as the 4G road-building programme.

Foreign entrants are often targeting specific segments or niches rather than competing directly with the big players. This targeted approach has allowed them to establish a presence in the market without disrupting the status quo.

The Colombian insurance market is becoming increasingly global, with foreign players now making up 36% of the market. This surge in foreign ownership is a result of relatively low formal barriers to accessing the market and the promise of opportunities presented by infrastructure projects.

In 2016, total gains from insurance firms' investments rose from COP2.8trn ($840m) in the first 11 months of 2015 to COP3.8trn ($1.1bn) by the same point in 2016.

Costs across the sector increased by 10% in line with premium growth, and remained relatively stable as a share of premiums.

Technical losses rose significantly from COP1.36trn ($408m) during the first 11 months of 2015 to COP2.34trn ($702m) in the same period of 2016.

This was more than offset by the strong performance of investments, leading to an increase in profits for the sector from COP1.3trn ($390m) to COP1.5trn ($450m) for the January-November 2016 period.

Colombia's market penetration is relatively low, with insurance premiums making up only 2.64% of the country's GDP by the end of 2015.

This puts Colombia ahead of Mexico, Costa Rica, Peru, and Guatemala in Latin America in terms of market penetration. The country's penetration rate is nearly double that of Chile, which stands at 4.74%, and significantly higher than Brazil and Argentina.

Low penetration in Colombia is partly due to the lack of a strong culture of life insurance, with penetration for this segment being less than 1%. However, this also presents a big business opportunity for insurance firms that can offer life products tailored to the mass market.

Colombia ranks lowest of the large markets in the region in terms of premiums per capita, with a figure of $162.60. This is well below the regional average of $251 and over three times higher than Guatemala's $47.40.

Auto insurance is a growing market in Colombia, with a growth rate of around 13% in 2016. This momentum is expected to slow down in 2017 due to a slowdown in car sales and exchange rates fading in importance to drivers.

Third-party auto insurance, or SOAT, is mandatory in Colombia and has been growing at a slower rate of 7-9% in 2016, with suspected fraud being a major issue.

Professional risk insurance has been growing slightly ahead of wages, with the minimum wage increasing by 7% in both 2016 and 2017. This segment was hit hard by the fall in oil production in 2016, but has otherwise performed relatively well in recent years.

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Seguros SURA Colombia is a subsidiary of Suramericana S.A. with over 78 years of experience.

The company offers a broad portfolio of insurance solutions and services that cater to 14 million clients in the country.

Its business lines comprise the Life and General insurance segments, including voluntary (Seguros SURA) and compulsory (EPS SURA and ARL SURA) insurance.

Seguros SURA is the country's leading company in the insurance industry, holding a 20.8% market share at the end of 2022.

EPS SURA is the leader in its sector, boasting a 19.3% market share.

Property & Casualty insurance is a vital sector in Colombia, driven by a building boom and mortgage-related growth.

Most houses in Colombia are uninsured, except those that are mortgaged, indicating a lack of culture around house insurance.

However, mortgage-related insurance has been growing at double-digit rates, with premiums increasing as infrastructure projects are completed.

Delays to financial closings and project execution led to a 4% contraction in premium growth in the first 11 months of 2016.

But with planned infrastructure investment on the rise, this segment is poised for rapid growth, attracting global players and new niche players to the sector.

The dynamic of infrastructure investment was a key factor in the growth of this segment, making it an attractive area for companies to enter.

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Colombia is taking a gradualist approach to implementing the Solvency II regime, which is a set of international standards for insurance companies.

Regulators in Colombia have already strengthened reserve requirements and balance sheets across the insurance sector, and in 2017 they plan to focus on themes like assets liabilities management and consumer protection.

The regulatory environment in Colombia is considered one of the most advanced in Latin America, with regulators continuing to align with international standards.

In 2015, guidelines were issued related to the calculation of incurred but not reported reserves, and in 2013, the calculation of technical reserves was modified through Decree 2973.

Many Colombian insurance firms are already well capitalized or part of larger multinational insurance firms with access to significant cross-border financing, so they may not need to raise capital or restructure their balance sheets to meet the new requirements.

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