AM Best maintains negative outlook on Colombia’s insurance industry

Global credit ratings agency AM Best has maintained its negative outlook on Colombia’s insurance industry due to challenging economic conditions and political uncertainty.

Although Colombia’s economy has grown in recent years, its development has been constrained by global economic pressures, high interest rates, and a deteriorating labor market.

AM Best also noted that the change in leadership in 2022 has introduced uncertainty regarding the government’s ability to stabilise the country’s fiscal situation.

Olga Rubo, financial analyst at AM Best, commented, “Although the Colombian insurance market grew by 10.4% year over year as of October 2024, it still recorded a negative technical result.

“The claims rate is recovering after being affected by the residual impacts of the pandemic, and inflation, despite the weakening of the Colombian peso in 2024, remains high, impacting medical costs and the cost of automotive spare parts.”

AM Best also highlighted that fraudulent activities, such as false claims and insurance scams, pose a threat to the industry’s stability and profitability.

Rubo added, “Insurers must remain vigilant in implementing robust fraud detection and prevention measures to safeguard their operations and maintain consumer trust.”

Mitigating factors to the negative outlook include the implementation of appropriate regulatory measures and healthy solvency ratios throughout the industry, as well as solid premium growth.

AM Best will continue to monitor the economic, political, and regulatory conditions in Colombia for their impact on the insurance industry.

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