The insurance market paid US$976 million in compensation to its policyholders in 2021, according to data published by the Central Bank —1.6% less in real terms than in 2020—. The reduction is explained by a decrease in social security compensation of 8% in real terms and 2.3% in accidents, which was offset by an increase of 16% in assets and 14% in life, according to the director of the Uruguayan Association of Private Insurers (Audea) Alejandro Veiroj.
On the other hand, the activity registered a real growth of 5% in pesos last year, as a result of an insurance issue equivalent to $1,559 million. This expansion “is basically explained by the increase in vehicle insurance, the natural increase in pension insurance and an increase in work accident insurance, partially offset by the decrease in engineering insurance,” said a report published by Audea.
Why a technical loss occurred
According to Audea, the sector went through 2021 with “moderate growth, technical balance in the private sector and good financial results“. The results showed that the sector had a (slight) technical loss of US$ 2.5 million in the competitive market.
Audea published in his report that “the private insurance sector does not present a technical deficit, but instead has a technical surplus of US$ 15.8 million” and “the technical deficit of the market in competition is explained by a technical loss of the state operator of US$ 18.4 million“.
The document detailed that this deficit of the State Insurance Bank (BSE) is mainly due to losses in two highly competitive markets: vehicle insurance (US$ 15 million) and agricultural insurance (US$ 19 million).
However, “in the case of the state operator, the technical deficits of the market in competition can also be compensated with the results of monopoly marketsjust as it has been happening with insurance proceeds Accidents and occupational diseases where one registers technical profit of almost US$ 23 millionAudea observed.
Consulted for this note, the president of the BSE José Amorín Battle subtracted greater importance from the fact and argued that you should see the full result. “In the technical result we had serious problems with the agricultural sector due to the dry season – in that area the BSE has 60% of the market. This year is going to be much better but also at the beginning of the year and at the end of last year we had the fires Foresters (For that reason) there are some events that mean that the technical result is not as good as one hopes, but in the end the overall result is technical and financial“, indicated Amorín. The hierarch estimated that the forest fires will have a cost for the BSE “in the axis of US$ 20 million”.
The head of the BSE highlighted that the state insurer had “an exceptionally good result, with historical record both in billing and profits”, which were almost US$ 1,100 million and US$ 143 million, respectively.
about how much of the Profits will go to General Revenue, Amorín did not want to give a figure before meeting with the Minister of Economy and Finance Lily Arbelechebut he anticipated that it will be a “significant” contribution.
Finally, Veiroj detailed to The Observer that the technical reserves of insurers at the end of 2021 totaled $5.18 billionwhich represents a 11% increase compared to 2020. The technical reserves are the amount of the obligations assumed derived from the insurance contracts that refer to the capacity to face them (similar to the reserves of a bank).
According to data provided by the executive director of Audea, insurance companies ended last year with financial investments who came to US$ 5,739 million, this is 13% above 2020.
