Insurance Companies in Mexico to Play a Key Role in Guerrero’s Recovery
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Insurance companies in Mexico will be pivotal in the reconstruction efforts in the state of Guerrero following the devastating impact of Hurricane Otis.
The role of insurance companies in Mexico will be crucial in the recovery process of Guerrero’s tourist areas.
Of the ten catastrophic events for which insurance companies in Mexico have made significant payouts, four have been hurricanes, according to the Mexican Association of Insurance Institutions (AMIS).
The total payments made for these hurricanes amount to $5.887 billion, as of March this year.
- Wilma (2005): $2.675 billion
- Odile (2014): $1.439 billion
- Gilberto (1988): $1.299 billion
- Isidore (2002): $474 million
In 2022, the amount of damages from hydrometeorological risks reached 2.2 billion pesos, even though it was a year without major catastrophic events, as reported by AMIS in light of the passage of Hurricane Otis through Guerrero, which has so far resulted in 39 fatalities.
Mexico is one of the countries with higher risks from natural phenomena, according to the United Nations’ records.
In this context, the role of insurance companies in Mexico is essential when considering options, especially from the private sector.
Insurance Companies in Mexico to Play a Key Role
Hydrometeorological insurance also covers direct damage to buildings, as well as coverage for contents, household appliances, and computing equipment, along with other losses like debris removal or extraordinary expenses.
It was noted that in the 17 states most affected by hydrometeorological events, the most affected business sectors are:
- Offices (24.3%)
- Factories (21%)
- Residences (19.7%)
- Hotels (11.6%)
- Warehouses (9.9%)
“The attention to insured claims in homes, small and medium-sized businesses, hotels, shopping centers, and other business entities is crucial to drive the timely recovery of an entire community.
Having access to the resources provided by insurance not only promotes individual, family, and business economic recovery but is also essential for strengthening Acapulco’s resilience,” AMIS expressed.
Moody’s Investors warned that even with a low level of coverage, Mexican insurers will bear the brunt of the recovery from the devastating impact of Otis in Guerrero.
“The total extent of the damages has not yet been determined, but we expect Mexican property and casualty insurers focused on the area to incur losses and report negative results in 2023, which could affect their solvency indicators,” according to a report from the rating agency.
At the same time, it estimated that for banks, telecommunications companies, and the Federal Electricity Commission (CFE), losses would be limited, and it expected their credit effects to be only “marginally negative.”
Moody’s predicted that the economic losses from Hurricane Otis would disproportionately affect low-income businesses and populations that are generally uninsured.
At this point, the national government will take action with the implementation of a recovery plan that covers small business owners.
Also read: Confirmation of Catastrophic Bond Payout in Mexico.