Mexican insurers seek to boost tepid homeowners market

Mexican insurance association AMIS estimates that only 4.5% of homeowners hold policies protecting their property against damage and theft, despite successes in other areas of the market, including auto insurance.

Francisco Oliveros, CEO of Seguros Sura México, in comments to local daily El Economista, attributed the low penetration for homeowners insurance to a prevailing idea that the risk is low and that policies are too expensive.

Homeowners penetration is much lower than auto (27%), life (16%) and medical (8%) insurance, according to the report.

"Many people continue to believe that if they pay a basic policy for their car of 1,800 pesos (US$87 per month) on average, considering their house has a value 10 times greater, then the cost of insurance would rise in equal proportion," said Oliveros. "When in reality, [homeowners insurance] has an annual average cost of 0.22% of net premiums [not including taxes] on the value of the property and covers fire, windows, theft, cash, electrical appliances and civil responsibility [not considering catastrophic coverage]."

Mexico's insurers are also encouraging homeowners to install security measures to lower policy rates, where alarm systems, security cameras, video-enhanced entry systems and electrified fences can produce a 5-10% discount per element, up to a total price reduction of 30%.

Theft is the most common problem for homeowners with fires – especially near Christmas and during droughts – coming in second, according to Seguros Sura. Such policies are relatively easy to acquire, independent from the mortgage situation, and require only that the home be inhabited, have a solid structure with basic security for entry points, and not located in a remote area.

Insurers in Mexico have been encouraged to raise premiums recently with peso depreciation, and it remains to be seen what the impact will be among consumers.