Mexico Auto Insurance Costs Poised to Jump 10–20% in 2026

Auto insurance premiums in Mexico could rise between 10% and 20% in 2026 due to recent changes introduced by the Ministry of Finance (SHCP) to the Federal Revenue Law (LIF). The modification eliminates the ability of auto insurers to credit Value Added Tax (VAT) on payments they manage on behalf of policyholders. Industry participants expect this to raise operational costs and push premiums higher across the market.

SHCP stated that the updated LIF aims to prevent duplicate deductions and strengthen fiscal oversight. Previously, insurers could credit VAT tied to third-party payments related to claims and policy administration. Under the new rule, this credit no longer applies, forcing insurers to absorb the full VAT amount or pass the cost on to consumers.

Rastreator, an online insurance comparison platform, said the change will directly affect pricing. “The impact on auto insurance policies could result in a price increase of between 10% and 20%. In an accident, this would be reflected in the deductible—users would pay a higher amount—and in the insured sum for repairs or replacement in the event of total loss,” said Pilar García, CEO of Rastreator.mx.

The platform explained that eliminating VAT creditability is meant to bring more clarity to fiscal operations in the insurance sector. “With the new Federal Revenue Law, this tax can no longer be credited, seeking greater fiscal clarity and avoiding duplication in deductions,” García said.

Industry analysts warn that higher premiums may lead users to reduce coverage or cancel policies, further widening existing gaps in insurance adoption. “These modifications could affect the industry’s financial stability by generating an increase in insurance prices and may also negatively impact the finances of policyholders,” Rastreator added.

Low penetration remains a longstanding challenge in Mexico. According to the National Financial Inclusion Survey (ENIF), 76.5% of adults in the country lack any form of insurance, largely due to cost concerns. Analysts caution that upcoming price adjustments could further limit access to coverage through 2025 and 2026.

Despite this, auto insurance remains one of the sector’s main growth drivers. The Mexican Association of Insurance Institutions (AMIS) reported that the industry reached MX$876 billion (US$47.8 billion) in written premiums in 2024, with auto insurance accounting for more than 21%. AMIS has not yet issued projections on the fiscal change’s impact but reaffirmed the segment’s importance.

Specialists also note that the reform may prompt insurers to redesign coverage tiers to maintain competitiveness. Adjustments could include modifying deductibles, reducing sums insured, or restructuring high-cost benefits. For policyholders, this means the impact may extend beyond higher premiums to changes in the scope and value of coverage.