/
Analysis

Increasing Health Insurance Penetration Levels

Sat, 09/05/2015 - 20:18

The insurance sector in Mexico has a good balance between life insurance and non-life insurance, with the life segment accounting for 45% of the total written premiums in 2015. This proportion is expected to remain stable by 2019. Both segments are forecasted to grow between 6% and 7% per year. Among the factors contributing to such growth rates, population ageing and the increase in life expectancy are perhaps the most significant ones. This means that in the upcoming years, the number of people in the retirement age will continue driving the growth of life insurance premiums, since people who are older than 65 years tend to buy life products so as to feel more secure. Improving healthcare provision and access to medicines is vital to support the further growth of this segment.

Government efforts to expand healthcare coverage through Seguro Popular have resulted in increased public spending, nevertheless, Mexico’s out of pocket expenditure remains the highest among OECD countries. A larger penetration of health insurance would help in reducing this figure. Microinsurance products have good prospects of growth and 66% of the Mexican population are potential microinsurance customers.

Only 7.3% of Mexico’s population has health insurance. According to a study, Towards Universal Financial Protection in Health in Mexico, published by AMIS and FUNSALUD in 2015, cost is the main reason people do not seek medical attentions. Today 84% of the population is covered by public and private health insurance, leaving 16% or 18.7 million people. Paradoxically, it is estimated that 64% of out of pocket spending is either redundant to public expenditure or incurred by the unprotected population.

There exists a significant opportunity for both public and private institutions to expand protection. The potential market for private insurance is large, currently representing only 4.1% of total health expenditure. The top five general private insurers in Mexico are Metlife (16.23%), GNP (11.77%), AXA Seguros (11.82%), Banamex (5.53%), and BBVA Bancomer (4.36%). In the individual health insurance segment the top five are Plan Seguro (42.52%), MediAccess (40.4%), AXA Seguros (7.68%), General de Salud (9.24%), and Centauro (0.09%). As Seguro Popular has expanded affiliations with the lowest income population, the private insurance sector is now more likely to grow in an effort to reduce out of pocket expenditure. Two options are depicted in this area: innovation in the private insurance sector that is complementary but independent from the public sector, and innovation in the private insurance sector in close collaboration with public institutions, aimed at significantly increasing private and public insurance and reducing out of pocket spending.