The Colombian insurance market is undergoing a period of strong premium volume growth, according to Moody’s Investors Service.

And the agency says this growth, coupled with new insurance regulations, is driving further development of the industry and greater competition among insurers.

Moody’s new Colombian Insurance: Industry Scorecard is a point-in-time analysis of a specific sector within the global insurance industry and highlight the key credit factors the agency reviews when assessing insurers in this sector, consistent with published rating methodologies.

Moody’s vice-president, senior analyst and author of the report, Alejandro Pavlov, said: “The Colombian insurance market is growing rapidly, with 13.4% premium volume growth in 2012.

“This healthy growth, and the recently implemented regulatory changes are driving competition among insurers.”

The Colombian insurance market is the sixth largest in the Latin America region and is a mature market with 45 international and domestic insurers writing life and non-life insurance products, notes Moody’s. The industry produced an estimated US$8.8bn in premiums in 2012.

In addition, investment-grade ratings in the sector are supported by Colombian insurers’ investment portfolios that consist primarily of national government bonds (Baa3/positive) and local bank term deposits.

But Moody’s says the industry faces challenges in the years ahead. These include continued modest penetration of insurance in the Colombian economy, which constrains the country’s operating environment, exposures to catastrophe losses arising from earthquakes as well as frequent floods caused by the ‘La Niña’ phenomenon, and insurers’ high reliance on investment returns to offset weak underwriting results.

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