Credit rating agency Fitch Ratings’ view of the Latin American insurance industry is generally stable in 2026, with a “neutral” outlook for most markets, reflecting Fitch’s expectations for stable performance in the region.
A notable exception is Mexico, where Fitch believes economic conditions have “deteriorated” as tax reform will put pressure on profitability and capital strength.
Fitch attributes the region’s generally stable assessment to easing inflation, lower interest rates and favorable macroeconomic conditions. While external shocks remain, Fitch does not expect these to hamper day-to-day operations or weaken insurers’ fundamentals.
Fitch said the outlook for most rated companies in Latin America continues to remain “stable” amid expectations that key financial indicators will remain within forecast ranges. Stronger macroeconomic stability and the consolidation of underwriting in 2024 and 2025 also contributed to an environment in which Fitch issued more upgrades than downgrades.
Fitch expects premiums to expand moderately in 2026, supported by gradually improving investment returns, especially in life insurance. However, the agency noted that insurers will need to adapt to a changing regulatory framework next year, with increasing requirements for internal oversight, system enhancements and process refinements. Fitch expects these changes to impose operating costs, but not enough to hinder industry growth.
Fitch highlights that across the region, the regulatory context will play an important role in shaping the outlook. Pension and healthcare reform debates in Colombia and Chile and tax changes in Mexico may affect the product profile and change customer needs. Fitch said inflation, increased pricing competition and rising medical and auto claims costs could lead to tight underwriting margins.
Political cycles add further complexity. Fitch noted that elections in Chile, Peru, Colombia and Brazil, as well as ongoing structural reforms in Panama and Colombia, could change regulatory priorities and impact profitability, capitalization and risk management strategies.
These dynamics, coupled with intense competition and fiscal changes, are expected to compress pricing and increase procurement costs. Fitch believes these pressures will drive insurers to adopt more technology-driven and differentiated product strategies.
In Brazil, Fitch maintained its “neutral” outlook, supported by consistent technical indicators and healthy capital levels. Fitch believes the insurer’s credit quality remains good despite the 5% tax on VGBL pension contributions, which has reduced segment income.
The agency predicts that Brazil’s gradual easing of monetary policy in 2026 may weaken investment performance, but will not endanger industry stability. A new insurance law expected to take effect at the end of 2025 will require operational adjustments, but Fitch does not expect large-scale upheaval.
Fitch also maintains a “neutral” stance on Chile, highlighting the support provided by a predictable interest rate environment. The agency expects steady economic expansion to support the life insurance sector, especially annuities, while the non-life insurance sector will rely on solid claims experience despite fierce price competition. Fitch will continue to monitor regulatory developments in the health sector, noting that shifts in consumer behavior are accelerating digital innovation across the industry.
Colombia’s “neutral” outlook is based on a gradual economic recovery and a modest decline in interest rates. Fitch said non-life insurance premiums should grow moderately despite higher loss ratios due to competition, maintenance costs and the growing popularity of electric vehicles.
Although profit margins are likely to decline, mandatory auto policies should benefit from strong growth in auto sales. Fitch expects the life insurance business to remain the main growth driver, supported by social security products, health insurance and credit-linked insurance. Although investment returns may fall, the agency believes the financial position of insurers will remain adequate. Fitch is monitoring proposed reforms in pensions and healthcare, as well as wage dynamics and the phased adoption of IFRS 17.
Mexico is the only market where Fitch considers the outlook to be “worsened.” The agency highlighted that the 2025 VAT reform, which removes credits for goods and services used in the performance of insurance contracts, will have a significant impact on financial performance and put pressure on capital. Despite continued double-digit premium growth, Fitch expects technical performance to remain tight, with the combined ratio exceeding 100% by 2026.
The life insurance segment will benefit from savings-driven demand, but the accident and health and automotive product lines face greater cost challenges. Fitch stresses that the final interpretation of VAT regulation in the upcoming fiscal resolution will determine the extent of the reform’s impact on profitability. High concentration in government bonds also makes markets sensitive to sovereign conditions.
Panama’s “Neutral” outlook reflects modest expansion, solid capitalization and satisfactory profitability. Fitch expects premium growth to strengthen as the broader economy recovers and credit activity increases. The agency noted that rising medical inflation and rising auto repair costs will push up loss ratios, but performance remains manageable. Fitch does not expect the implementation of IFRS 17 to cause significant disruption, given the short-term product focus of local insurers.
Fitch also maintains a “neutral” stance on Peru’s outlook, expecting economic growth to continue at current levels. Strong performance in life, accident and health businesses will help sustain expansion, while a concentrated market structure will foster intense competition among major insurers.
Fitch notes that bancassurance and digital channels play an increasingly important role in supporting distribution. Life insurance and annuity products continue to surge, driven in part by the shift of pension fund withdrawals into annuity purchases. Although non-life insurance results are under pressure from competitive pricing and broader macro factors, Fitch believes performance remains within acceptable thresholds.
Fitch Ratings concludes that across Latin America, insurers will maintain financial strength and profitability to cope with the challenges of 2026 by balancing regulatory changes, rising costs, political developments and competitive pressures with investments in technology and operational efficiencies.
Senior Director Carolina Triat commented: “The Latin American insurance industry is expected to remain stable, supported by a stable macroeconomic environment, benign inflation and easy interest rates. However, the industry continues to face ongoing challenges, including regulatory shifts, technological innovation, climate-related risks and changing consumer preferences, which require proactive adaptation and strategic responses by market players.”