The mortality protection gap in Latin America
The region holds significant untapped potential for life insurers.
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The Latin America and Caribbean region has a mortality protection gap of almost USD 14 trillion as of 2019, we estimate. This is the total shortfall in financial resources needed to maintain households’ living standards and repay debts should they lose the primary breadwinner.
Mortality resilience, which we measure through our Swiss Re Institute mortality resilience index, has improved in recent years in the region's major economies, primarily due to higher mortality insurance coverage. Life insurers have made an important contribution to closing the protection gap despite historically low life insurance penetration in Latin America.
COVID-19 darkens the outlook
However, we expect COVID-19 to upset the trend and widen the protection gap. The current economic crisis will spark the deepest recession in modern history for Latin America. We anticipate a slump in demand for life insurance and a fall in premiums in 2020. We also expect declines in household wealth amid rising unemployment, lower remittances and increased financial volatility.
Closing the mortality protection gap in the region’s six largest markets is a USD 33 billion life insurance premium opportunity, we estimate. Through innovations in digitalisation and new technologies, life insurers can offer solutions to help change buying behaviour and address the market structures that contribute to the generally low levels of insurance penetration in Latin America.