The insurance market in Mexico has been growing tremendously over the last decade, doubling in volume in less than ten years. Mexico is the second largest insurance market in Latin America, second only to Brazil. Its value in premiums is currently worth in excess of USD25 billion, representing more than 2 percent of Mexico's GDP, and it has strong potential for continued rapid growth considering the penetration is still low compared with other OECD and Latin American markets.
Much of the growth in the insurance market has been fuelled by foreign investment. Insurance companies that are authorized to do business in Mexico have been able to be fully controlled by foreign shareholders since the mid to late 1990s when the North American Free Trade Agreement (NAFTA) and other international treaties took effect. Currently, more than 70 percent of insurers' capital is controlled by foreign entities. Almost all global insurers, brokers and reinsurers have a presence and/or are doing business in Mexico.
The insurance market has also benefited from Mexico's improving financial system, which has proven to be one of the most solid and capitalized environments during the recent global crisis. Having learned from its own financial crises experienced throughout the 1970s to the 1990s, Mexico has earned a strong reputation for fiscal and macro-economic stability due to its economic policies and the regulatory and capitalization controls imposed over the financial and insurance industries. Mexico's financial system has also proven to be one of the most profitable in the world for shareholders in recent years.