Market Overview

The Paraguayan insurance market is small and has not undergone significant changes in recent years. As of the 30th of June 2021, total premium income amounts to USD 414.83mn, of which USD 336.50mn was non-life business and USD 66.29mn was life business.  

Penetration of insurance products is low, partly due to a lack of an insurance culture amongst individuals and the wider commercial sector. Other important factors that contribute to this include the sizable unregulated informal economy and the fact that an estimated 26.9% of the population are considered to live in a state of total poverty.

While Paraguay is a small market, ranking 81st in the world and seventh in South America in 2020, it remains a strongly competitive market with most product lines and rates continuing to be under pressure.  

There are 34 insurance companies currently in operation, and all of them are authorised to write non-life classes. However, the market is top-heavy with the largest five insurance companies holding over 50% of the non-life premium income and over half of participating insurers having a market share of less than 2%.

In 2021 the non-life account contracted for the first time in over a decade, despite solid nominal GDP growth. Future growth prospects for the market remain uncertain as the country faces challenging economic risks and fallout from the COVID-19 pandemic.

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Market Developments

The Paraguayan government remain committed to introducing obligatory third-party motor insurance, a legislative project that been underway since 2019. Although this topic remains highly politicised, with strong opposition based on an unfair financial burden being placed on motorists during a difficult economic climate, it does seem likely to go ahead and draft regulations were submitted to the National Congress this April.

The Central Bank of Paraguay have also approved a new regulation aimed at establishing minimum standards for good corporate governance, which apply to the banking and insurance sectors. They are expected to be adopted from January 1st 2023, although the full impact of this is yet unknown as further details concerning implementation and guidance remain outstanding.  

Insurtech is continuing to develop in Paraguay, driven by the enforced adoption of technology and further smartphone penetration that Covid-19 made a necessity. The pandemic prompted greater use of technology throughout the industry as a tool for virtual meetings, webinars and relationship management.