By: Daniel Valero Andrade
Expanding insurance coverage in Central America requires a comprehensive approach that involves various stakeholders. This collaborative effort is essential for building a broader, more accessible, and sustainable protection ecosystem
Insurance penetration in Central America continues to be quite low, with rates significantly below the global average. Several factors contribute to this stagnation, prompting the industry to implement strategies aimed at reversing this trend.
Innovation, technology, and insurance education are becoming immensely valuable elements for increasing protection in this region of the continent, as explained by Eduardo Fábrega, executive president of ASSA Compañía de Seguros, during an interview with El Asegurador LATAM.
El Asegurador LATAM (EAL): What are the growth forecasts for the insurance market in Panama and Central America, and what factors are driving it?
Eduardo Fábrega (EF): The forecasts for the insurance market in Panama and Central America are optimistic, indicating sustained structural growth in the coming years. In Panama, we project a compound annual growth rate of 4% to 6% for the insurance industry, driven by several key factors.
First, Panama’s recent removal from the European Union’s list of tax havens is expected to enhance the country’s international perception. This change will create opportunities for increased foreign investment and a revitalization of strategic businesses.
This aligns with several large-scale infrastructure projects, including significant investments in the Panama Canal, the mega-project on the Indio River, the development of a national gas pipeline, the construction of the Panama-David railway, and the potential reactivation of mining activities. These initiatives are expected to create considerable demand for insurance in areas such as engineering, civil liability, occupational health, and surety bonds.
One significant project is the dam and reservoir on the Indio River, led by the Canal Authority, with an estimated investment of US$1.6 billion. Its objective is to guarantee the supply of drinking water and the future operation of the canal, which will create significant opportunities for construction-related insurance.
Another essential factor to consider is the potential reform of the Preferential Interest Law, which could reactivate the housing industry and subsequently increase the demand for mortgage, life, and residential multi-risk insurance.
Additionally, the tourism sector is performing strongly, with Panama establishing itself as an attractive destination in the region due to its excellent air connectivity and its emerging role as a cruise hub in Central America.
This upward trend is evident in a 7.7% increase in tourism spending as of April 2025, positively impacting various sectors such as Travel, Health, and Civil Liability.
In financial terms, the figures support this momentum: premiums written increased by 3.7% year-on-year in April, while bank deposits and loans continue to grow at a healthy rate.
There are also clear signs of economic dynamism for the rest of Central America, though these vary from country to country. For instance, Costa Rica maintains a steady flow of foreign investment, which exceeds 4.5% of its GDP, particularly in sectors such as technology, tourism, and advanced services. This has driven growth in personal insurances, including life and health, which have increased by over 12% in the last year.
Guatemala and El Salvador are also showing good progress. In El Salvador, the financial industry experienced growth of 8.4% in 2024, while premiums in the general insurance segment increased by 12%. This trend reflects greater confidence, economic stability, heightened risk awareness, and a favorable environment for public investment in infrastructure. In addition, the advance of digitalization is expanding access to insurance in traditionally underserved segments, especially through banking.
Additionally, there are relevant initiatives like agricultural and parametric insurance in countries such as Guatemala and Honduras, aimed at increasing resilience to climate change. There is also a gradual strengthening of regulatory frameworks, which is improving transparency, trust, and the technical sustainability of insurance companies.
However, we still encounter significant structural challenges, including low insurance penetration—approximately 2% of GDP in several countries—high levels of informality, and limited financial education. But there are also great opportunities. The true challenge is in creating innovative, inclusive products, enhancing our analytical capabilities, and providing straightforward solutions that directly meet the needs of the population.
Panama and Central America are in a favorable position to establish a stronger, more modern, and inclusive insurance ecosystem. Investments are growing, risks are changing, and technology is opening new opportunities. This is the ideal moment to transform insurance into a tool for well-being, resilience, and sustainable development in the region.
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