Life Insurance Leads Aruba Insurance Industry, States Timetric
27 Mar 2013 • by Natalie Aster
The insurance industry in Aruba is very small and young, and yet highly competitive, with 23 insurance companies operating in the country. The life segment accounted for 57.6% of the overall insurance industry’s written premiums in 2012, and is expected to grow at a CAGR of 2.1% over the forecast period due to the increasing disposable income of the Aruban population. Growth in the tourism and oil refining industries will drive growth in the country’s non-life segment.
Growth of the Aruban travel and tourism sector
Aruba’s tourism industry has performed well and recorded significant growth in the last few years, with the Aruban government proactively investing to improve the overall quality of tourism services. In 2011, the total amount of tourism receipts grew by 10.8% over 2010. In addition, the number of cruise passengers grew at an annual growth rate of 5% in 2011. The growth in tourism in Aruba will help the sales of travel insurance products over the forecast period.
High combined ratio in the non-life segment
During the review period, a consistently high combined ratio was recorded by non-life insurers, which indicates low profitability. During the review period, the combined ratio of the non-life segment was permanently above 100%, and is expected to remain so over the forecast period. Significant expenditure on commissions and expenses is a key reason for this.
Growing export activity due to growth in the oil and petroleum industry
According to the report “The Insurance Industry in Aruba, Key Trends and Opportunities to 2017” by Timetric, after a poor performance in 2010, the Aruban oil and petroleum industry started to recover in 2011 and performed well in 2012. This positively impacted the Aruban economy which recorded an increase of 25.1% in the value of its exports in 2011, growth which is expected to continue over the forecast period. This will positively impact the insurance industry, and marine and transit insurance in particular.
The Insurance Industry in Aruba, Key Trends and Opportunities to 2017
Published: March, 2013
Price: US$ 1,950.00
Highly competitive insurance industry
A total of 23 insurance companies serve a population of a little over 100,000 in Aruba, which makes the insurance industry highly competitive. Of the country’s 23 insurers, seven operate in the life segment, 12 in the non-life segment, and the remaining four are captive insurance companies. The presence of numerous insurance companies in such a small country limits growth opportunities. As a result, insurers need to spend on research and development in order to understand customer requirements rather than compete for market share. With rising competition and an absence of product innovation, growth is expected to be a key over the forecast period.
More information can be found in the report “The Insurance Industry in Aruba, Key Trends and Opportunities to 2017” by Timetric.
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