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Mexican insurers see higher claims costs due to peso's weakness vs. US dollar

Thedepreciation of the Mexican peso has started to affect the costs of insurers,especially in terms of machinery, auto and medical claims, El Economista reported Oct. 5, citing Recaredo Arias, the head ofMexican insurance association AMIS.

In thehealth sector, the higher price of medication and medical equipment isaffecting the price of surgical procedures and exams, which in turn raisestotal insurance claims, Arias reportedly said.

Inaddition, the volatility of the dollar has affected insurers in terms of thecalculation of their capital and solvency, he said.

Althoughthere are many subsidiaries of foreign firms in the Mexican insurance sector,representing 67% and 64% of premiums and capital, respectively, they are alsoaffected by the country's economy slowdown and the currency's weakness, henoted.

Yetdespite the higher claims costs, the Mexican insurance industry continues togrow strongly. The sector grew 11.8% in the first half of 2016 in nominalterms, led by growth in life, health and auto insurance, Arias noted.

Thisgrowth is significant, especially considering this figure does not include newinsurance policies, which are contracted by state-owned oil company Pemex everytwo years, Arias pointed out.

Goingforward, one of the key challenges for the sector is promoting public policiesthat help insurers to meet the population's insurance needs, he added.