Nicaragua Insurance Report Q2 2016
BMI View: Nicaragua's is the smallest of the insurance industries in the Central American region, withtotal gross premiums in 2016 set to reach just USD197mn, equating to insurance density of just USD32 percapita. Local currency growth has been high, but returns for international companies have been limited bycórdoba weakness which is set to continue. Demand for health insurance will be a key driver in non-lifebusiness, particularly as low-cost options are developed for low-income individuals and households. A lackof competition will, however, curtail innovation and inflate prices across much of the market, both trends tothe detriment of consumers.
Key Updates And Forecasts
The release of full-year 2015 data from the insurance superintendent shows a slowdown across theindustry, with life insurance slipping to 10.7% growth in NIO terms, a dollar rate of expansion of just5.4%, one of the lowest in years. We expect slower growth to continue over the forecast period to 2020.
Non-life insurance fared slightly better, outperforming expectations. In 2016, growth will continue toslow, reaching just 8.9% in córdoba terms. Health insurance was the key outperformer with annualgrowth of 19%, and expansion will remain in excess of 10%.
Currency weakness is set to persist, coupled with a cooling of the relationship between Nicaragua andVenezuela; this is negative to the economic outlook for the country over the coming years. The córdobais set to depreciate to 29.3 to the USD by end-2016, from 27.9 in December 2015.
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