The property protection gap in Latin America

This paper estimates natural catastrophe property losses from historical and modelled perspectives in Latin America and assesses what can be done to close the gap. It analyses the role of the public and private sectors and how these can help change buying behaviours and market structures.

Key insights include:

• Fueled by economic development and rapid urbanisation, the value of property at risk has outpaced the purchase of insurance in many countries of the region, including in those prone to natural catastrophes.
• Using Swiss Re's loss distribution models for seismic risk for a sample of seven countries in the region, results estimate total economic losses of USD 6.9 billion annually, 88% of which are expected to go uninsured.
• The property insurance market in Latin America is growing rapidly. Despite being a small market by global standards, its share of the global market rose from 2.4% in 2005 to 4.4% in 2014. Brazil and Chile have the highest premium volume in the region, USD 6.5 billion and USD 3.4 billion respectively, with the highest property penetration rates in Chile (0.53%) and the Dominican Republic (0.42%).
• Still, the region has a long way to go to reduce the impact of the gap on its economy. New distribution technologies and purposefully designed products can also help increase insurance penetration and reach a key underserved market.