Every quarter the Mexican Association of insurance Institutions or AMIS provides an interesting and important report regarding the state of the insurance industry in Mexico. Included in this report is a break down by insurance niche, including the Tourist Auto niche. Recently, the 2015 Mexico Tourist Auto Insurance Report was released. You can compare it to the 2014 Mexico Tourist Auto Insurance Report also.
Today we will take a quick look at how to read this report and what it means. Typically it comes in in an excel format and provides the most current time period to the left and the last year’s comparison to the right.
The columns are named as follows: Number , which indicates the position within the niche the company holds, the company name, the written premium, the percent year over year growth, paid claims, loss ratio, and market share for the company. The totals provide a feeling for how the niche over all is doing. The key is that it helps us to understand the health of the market and individual companies.
Knowing how the company is growing or contracting can indicate a loss of appetite in the niche or a shift in focus. Loss ratio, can indicate what rates will do over the next period, and the health of the company within the niche. You may look at the loss ratios and salivate as US companies would kill for those types of loss ratios. However, it is important to remember that the combined ratio is comprised of loss ratio, administrative expense, and commission. Most companies that are running under a 50% loss ratio are profitable, whereas those that are over are struggling. That said it is important to not look at quarters and make snap judgements. MANY of the losses come in the first quarter, then slow over the rest of the year, due to the production volume that occurs in the 4th quarter.
Two other things to keep in mind is that not all of the companies that report to AMIS are rated according to AM Best or do and do not have an A rating. Mexico has been trying to fix this with their Solvency II legislation, but not all results have been released yet. Others Like ACE, ABA, Mapfre, and others are rated as a part of an overall group of companies which is common in the industry. Finally others like GNP have are rated by AM Best and have been awarded an A – Rating. Qualitas is also rated but carries a B rating. Finally, the loss ratios can often be deflated as some companies include other “tourist products” similar to Mexico Tourist Auto insurance that aren’t reported elsewhere. Several companies like ACE, Qualitas, and others include “NorthBound” or USA Tourist Auto with in their numbers. Northbound programs tend to have a very low loss ratio.
The key, just as it is in the US, is to partner and sell with companies that are rated by AM Best, are focused on the niche, are growing and have good loss ratios.
For more information about AMIS numbers or how to tell if a company is solid, contact us today at 844-273-5527.