Insurers would absorb part of the increase in policies

In order to maintain clients, some insurers in Mexico are analyzing absorbing “a large part” of the impact of not crediting value added tax (VAT) on certain components of the cost of claims.

Quálitas, which concentrates 32.7 percent of the car insurance market in the country, declared that the company will resort to this measure in order to “maintain an attractive value proposition.”

José Antonio Correa, executive president, and Bernardo Risoul, general director of Quálitas Controladora, explained that the rates are calculated with a model that includes inflation in spare parts and labor, frequency and severity, portfolio mix, service costs and competitive conditions, among other factors, which results in an increase in the average annual premium close to inflation (between 3 and 5 percent).

Mapfre, for its part, announced to the agents that it will absorb this increase in the policies and will not pass it on to the client, except in very specific cases.