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Creditor Insurance in Mexico

  • November 2015
  • -
  • Finaccord
  • -
  • 29 pages

inaccord’s report titled Creditor Insurance in Mexico offers uniquely detailed insights into the market for creditor insurance, sometimes also referred to as payment protection insurance or loan-related insurance, as acquired by individual borrowers in Mexico. Drawing on the results of a survey of 50 lending institutions, the study analyses the distribution of creditor insurance by banks and other lending institutions, how provision rates vary for different lending products, operating models used for arranging creditor insurance, and distribution partnerships weighted by the size of distributors. The PartnerBASE™ dataset that accompanies the report details all creditor insurance distribution deals traced by Finaccord. In short, this study will provide you with the definitive guide to current and future opportunities in creditor insurance in Mexico.

Key features of this study plus the PartnerBASE™ dataset and market data annexe that accompany it include:

- quantification of creditor insurance market size and growth with a timeline from 2011 to 2015 and onwards to 2019: how much is this market worth in Mexico and what is its future development potential?

- segmentation of this market both by underlying loan type (differentiating between mortgages, point-of-sale automotive finance, other consumer finance and credit card loans) and by type of cover (differentiating between cover for death / permanent disability and temporary incapacity / unemployment);

- consideration of operating models used for creditor insurance: how advanced is the use of captive and joint venture underwriters by lending institutions in Mexico and what are the opportunities for external underwriters?

- calculation of weighted provider share of partnerships: Finaccord’s unique quantitative analysis helps to identify which underwriters of creditor insurance hold the relationships that offer the most potential;

- investigation into alternative distribution channels for selling creditor insurance: a number of factors could increase the potential for entities other than the lending institutions themselves to sell creditor insurance in Mexico.

Table Of Contents

Creditor Insurance in Mexico

00 EXECUTIVE SUMMARY 1
10 INTRODUCTION 3
What is this report about? 3
This report provides a comprehensive analysis of loan-related insurance policies in Mexico 3
Rationale 3
The report tracks over 60 separate initiatives for marketing creditor insurance through lending institutions 3
Methodology 3
Survey of banks and other lending institutions 3
Market data 4
Definitions 5
Creditor insurance 5
Mortgages, consumer finance and credit cards 5
Weighted provider share of partnerships 5
Operating models 6
Abbreviations and exchange rates 7
PartnerBASE and market data annexe 7
Finaccord 7
20 MARKET ANALYSIS 9
Banks and other lending institutions covered 9
Introduction to the banking sector 9
Banco Azteca leads the market in terms of its outright number of retail customers 9
but not when measured by its share of banking assets 9
The banking sector is dominated by several foreign-owned entities 10
A number of banks targeting lower-income customers are affiliated to retailing groups… 10
… albeit Walmart has divested its banking subsidiary to Grupo Financiero Inbursa 10
INFONAVIT accounts for a high proportion of mortgage loans outstanding… 10
… which limits the business available to mainstream banks and mortgage lenders 11
Sociedad Hipotecaria Federal (SHF) plays an important role in promoting development of home loans 11
Consumer lending market size and growth 11
Mortgage lending 11
Mortgage balances outstanding increased significantly between 2011 and 2015 11
Non-mortgage lending 13
… and the value of total non-mortgage consumer lending moved up at an even higher rate 13
Credit and other pay later cards 14
Credit and other pay later cards per capita reached 025 by the end of 2015 14
Creditor insurance provision rates, operating models and partnerships 16
Creditor insurance linked to mortgages 16
Mortgage lenders typically offer related creditor insurance 16
with the critical exceptions of INFONAVIT and FOVISSSTE… 16
… who have developed an alternative means of protection 16
Mortgage-related creditor insurance in Mexico is sourced through a variety of operating models 16
with eight providers prominent in the weighted analysis of partnerships… 16
… most notably captive and joint venture entities 16
Smaller mortgage lenders generally source creditor insurance from external underwriters 17
Creditor insurance linked to consumer finance 19
Creditor insurance is on offer from the vast majority of institutions granting non-mortgage loans 19
Seguros Azteca is prominent in the weighted analysis of partnerships… 19
… followed by the same insurers that are most visible in mortgage-related creditor insurance 19
Other providers include ACE, Assurant, AXA, BNP Paribas Cardif, MAPFRE, MetLife, Quálitas and RSA 19
Six non-mortgage lending institutions apparently lack an arrangement for creditor insurance 20
Creditor insurance linked to credit cards 22
A majority of credit card issuers have an arrangement for related creditor insurance 22
Seguros Inbursa is used by two retail sector card issuers as well as two affiliated banks 22
AIG works in this field with both Banco Ahorro Famsa and Distribuidora Liverpool 22
Four credit card issuers do not promote associated payment protection insurance 22
Creditor insurance risk coverage 24
Larger lending institutions are generally more likely to offer more comprehensive insurance policies… 24
… as is clear from the unweighted and weighted analyses of policy risk coverage 25
Alternative distribution channels 27
Brokers represent a further distribution channel for creditor insurance… 27
… as do car dealers 27
Creditor insurance market size, growth and forecast 27
Creditor insurance policies linked to mortgages account for the majority of the market value… 27
albeit those linked to point-of-sale automotive finance grew the most between 2011 and 2015 28
LIST OF GRAPHICS / TABLES
00 EXECUTIVE SUMMARY 1
Creditor insurance gross written premiums in Mexico, segmented by policy and cover type, 2011, 2015 and 2019 (table) (forecast) 2
10 INTRODUCTION 3
Banks and other lending institutions in Mexico contacted by Finaccord, segmented by type 4
20 MARKET ANALYSIS 9
Residential mortgage lending balances outstanding in Mexico (absolute and per capita), 2011 to 2015 12
Consumer non-mortgage lending balances outstanding in Mexico (absolute and per capita), 2011 to 2015 13
Credit and other pay later cards issued and per capita in Mexico, 2011 to 2015 14
Key data points for the consumer lending market in Mexico, 2011 to 2015 (table) 15
Provision of creditor insurance linked to mortgages in Mexico, 2015: provision rate, operating models and weighted provider share of partnerships 18
Provision of creditor insurance linked to consumer finance in Mexico, 2015: provision rate, operating models and weighted provider share of partnerships 21
Provision of creditor insurance linked to credit cards in Mexico, 2015: provision rate, operating models and weighted provider share of partnerships 23
Unweighted risk coverage of creditor insurance policies in Mexico, segmented by type of underlying product, 2015 24
Weighted risk coverage of creditor insurance policies in Mexico, segmented by type of underlying product, 2015 26
Creditor insurance gross written premiums in Mexico, segmented by policy type, 2011, 2015 and 2019 (forecast) 28
Creditor insurance gross written premiums in Mexico, segmented by cover type, 2011, 2015 and 2019 (forecast) 29
Creditor insurance gross written premiums in Mexico, segmented by policy and cover type, 2011 and 2015 (table) 29
Creditor insurance gross written premiums in Mexico, segmented by policy and cover type, 2019 (table) (forecast) 29

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