This year the pandemic is hitting insurers less, after five continuous quarters of reductions in net profits, these companies closed the first three months of the year with 12,000 million pesos in profits, 12.5% higher than those reported in the same period of 2021 and when they showed a 44% drop, reported the National Insurance and Bond Commission (CNSF).
This growth was driven by life insurance, which after registering losses of 1,000 million pesos in 2021, for January-March of this year the sector reached profits of 3,200 million pesos, detailed the regulatory body of insurers.
In addition, there are two elements that influenced the recovery, on the one hand, the decrease in the reserve for ongoing risks and, on the other, a drop in the net cost of claims, which is related to the reduction in payment claims for cases of Covid-19.
Marco de la Rosa, insurance risk management consultant, explained that although some insurers faced red numbers last year, to meet their commitments they made use of capital reserves, leverage or were balanced with the profits of other operating segments.
For example, there was an insurer that during 2021 in the medical expenses segment reported losses of 3,074 million pesos, however, in its operations as a whole it reported profits of 2,721 million pesos.
After a year of applying various measures to face the consequences of the pandemic, where the sector reduced its operating expenses by 11%, mainly in fees for professional services of its workers and agents, in the first quarter of 2022 the expenses in this item 16.8%, mainly due to the 54.6% increase in salaries and employee benefits.
Payments for Covid-19
The drop in profits reported last year is related to the growth in the net cost of claims, since it was the period when more claims and payments for medical and life expenses were reported.
Since the pandemic began to date, insurance companies have paid around 59,974 million pesos between medical care and deaths.
The foregoing has made Covid-19 the most expensive claim in the history of the insurance industry in Mexico.
Affects medical inflation
The regulatory body for insurers anticipated that this year may see upward adjustments in the prices of various insurances.
“Despite the fact that the pandemic is a unique event and should not impact policy prices, an adjustment in costs is to be expected during 2022, especially within life and medical expenses,” the CNSF reported in its conjuncture report. monthly.
In this regard, there are various elements that influence the costs of insurance, for example, in health products and medical expenses, the issue of medical inflation, which in 2021 was 17%, and the increase in demand for services. health, both public and private.
One of the most important implications of the pandemic was the saturation of public health services, which led the population to seek medical expense insurance as a complement to public health coverage. The demand for health services, both public and private, produced a growth in their costs, and since it constitutes an important component of the accident rate in health and medical expense insurance, it directly impacted the increase in the price of this type of insurance. ”, pointed out the CNSF.
This Tuesday and Wednesday the 31st Convention of Insurers will be held in a hybrid format, the topics that will be addressed in person have to do with post-pandemic insurance, the challenges and opportunities that will be faced, climate change and its impact in the industry of the sector, as well as risk management and digital insurers, among others.
On the second day, that is, tomorrow will be entirely online, various conferences related to financial education and the different types of insurance offered by the sector will be presented.