The report titled “Economic Liberalization in Latin America-How is it Affecting Insurance?”, provides a comprehensive analysis of economic liberalization in Latin American regions. This report covers what is economic liberalization, effects of economic liberalization, effect of economic liberalization in Latin American regions, economic liberalization affecting insurance and future effects of economic liberalization.
What Is Economic Liberalization: Establishing opportunities with the rest of the world with respect to trade, regulations, taxation and other sectors which affects the business in the country is termed as “Economic Liberalization”. With steady economic growth within a country it is easy to estimate the level a country is liberalized economically and how easy it is to invest and do business in the country. Almost all the developed countries experienced liberalization process and the emerging countries are yet to experience it.
Investments in the emerging countries may hamper due to few barriers such as tax laws, foreign investment restrictions, and legal issues and accounting regulations, all of which make it difficult or impossible to gain access to the country. Therefore, economic liberalization process relaxes such barriers and relinquishing some control over the direction of the economy to the private sector. This trend often involves some form of deregulation and privatization of companies in the emerging countries. The main goal of economic liberalization is the free flow of capital between nations and the efficient allocation of resources. It is usually involves reduction of tariffs, trade laws and other trade barriers. When a country is liberalized, stock market values also rise. Majority of the fund managers and investors are interested in lookout for new opportunities for profits. Therefore, a huge investment in the emerging countries leads to a flow of capital. Economic liberalization reduces the political risks to investors.
Economic Liberalization Affecting Insurance: Latin America is an attractive and profitable region for global insurers who are facing a sluggish growth. Latin America has low insurance penetration and therefore, has a capacity for strong growth in income per capital which is the key asset for insurers. The political and economic conditions vary and overall the region has a bright outlook. Latin America is a region with the combination of rising incomes, rising penetration and large offshore energy-related projects which will strengthen the demand for personal and commercial non-life insurance products.
Brazil accounts for a major share in the insurance market in Latin America. Majority of the insurance companies utilize advanced technologies such as digital transformation to drive efficiency, improve profitability and increase penetration. Majority of the insurance companies are able to maintain marginal profitability despite the economic downturn in Latin America and this trend is expected to continue in the near future. Brazil is making structural reforms after emerging from severe recession. Few regulatory reforms are setting a new insurance compliance agenda and bolstering capital adequacy requirements which will increase the insurance industry’s long-term financial stability. Agricultural insurance in Latin America is undeveloped because the majority of the farmers are categorized as unprotected and underserved by traditional insurance markets. Latin America has witnessed a major transformation in the past two years. With the increase in global liquidity tightening more gradual and a reversal in US dollar strength has supported the economic recovery in many regions.
Although the economy is improving in Latin America, there is still a disappointing rate of growth in business environments. Major reforms are needed to simplify costly and complex tax systems in the region, while broadening the tax base which remains over-reliant on indirect taxes. Liberalisation is required to improve competition in the goods and services markets, and increasing the flexibility of labour markets. Underdeveloped infrastructure is a major factor to achieve sustained economic growth. There is increase in private investment in financing infrastructure with the upgrading of the regulatory frameworks for public-private partnerships (PPPs) and by removing restrictions on private investment in few areas.
Future Effects of Economic Liberalization: The underlying goal of economic liberalization is to have witness an unrestricted capital flowing into and out of the country to boost growth and efficiencies within the home country. After a tough period of economic slowdown in Latin American region, it was expected that the upcoming year will witness a recovery. Brazil and Argentina are recovering from recession and the regional economy as a whole is starting anew. A steady growth is expected to stabilise the economy of the Latin America region for the next few years.
Key Topics Covered in the Report:
Latin America Insurance Industry Market Research
Latin America Market Size
Latin America Economic Performance
Brazil Insurance Industry Market Research
Reinsurance Market Research Report Latin America
Latin America Insurance Industry Competition
Insurance Markets in Argentina
Mexico Insurance Industry Market Research
Latin America Insurance Industry Regulations
Latin America Insurance Industry Future Outlook
Uruguayan Insurance Industry
Ecuadorian Insurance Industry
Colombian Insurance Industry
Peruvian Insurance Industry
Chilean Insurance Industry
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Ankur Gupta, Head Marketing & Communications