Chile’s recent entry into the Organization for Economic Co-operation and Development (OECD) group of countries has sparked new challenges for the insurance sector, especially in increasing the ratio of premiums per capita, industry leaders and supervisors told a panel in Santiago.

Chile currently boasts a US$344mn premiums per capita indicator, which equals a 3.9% premium to GDP ratio, insurance association AACH head Mikel Uriarte said at the presentation of Fundación Mapfre’s eighth report on Latin America’s insurance market.

While Chile’s indicator is the highest among Latin American countries, Uriarte said the local industry should start comparing itself with those of OECD countries now, and that it should start targeting an 8-10% premium to GDP ratio in the future.

AACH is forecasting a 3.7% premium growth this year to reach US$7.22bn. Mexico and Spain’s insurance markets, for example, currently have US$19.0bn and US$87.0bn in premiums, Uriarte said.

Osvaldo Macías, insurance superintendent at the country’s securities and insurance watchdog SVS, said there is still much to be done in the local industry, and named a few new segments that will help the market grow in 2010 and beyond.

Among them, the Chilean version of the US 401-k or employer-sponsored pension schemes (APVC), which debuted on October 1, 2008 but were off to a slow start because of tougher than expected regulations and the global crisis.

Experts believe the APVC market could generate as much as US$600mn over the next few years. It offers the possibility to save extra money on top of the mandatory pension plans for those workers that make less than 1.7mn pesos (US$3,300) a month, which represent about 95% of the 3.7mn affiliates to the country’s private pension fund managers (AFPs).

Macías also said that the second tender of the survival and disability insurance or SIS which insurance companies sell to AFPs, a new modality of variable life annuities and expanding microinsurance services, could also be new sources of growth for the local market.

“I also believe that insurers gather all the conditions to begin managing pension funds and to enter the independent workers’ market with the right policies.”

On January 11, Chile became the 31st member and the organization’s first in South America under an accession agreement. The entry still has to be ratified by congress.

There are 54 life and P&C insurance companies operating in Chile.

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