The increasing escalation of insecurity in Ecuador affects insurers who these days announced changes in internal policies due to the increase in accidents due to the theft of some makes and models of vehicles that would no longer be considered for renewal and the conclusion of new insurance contracts.

Some have lists of makes and models that have been temporarily excluded from coverage since August. Others list cities and provinces where the measure would apply to all models and brands.

Insecurity and attacks affect insurers’ funding costs

In this regard, Patricio Salas, executive secretary of the Ecuadorian Federation of Insurance Companies (Fedeseg) and general director of the Association of Ecuadorian Insurance Companies (Acose), confirmed that the union is aware of these communications. He explained that historically the rate of traffic accidents was around 54%, but in 2022 it increased to 68%, and by July 2023 it is 75%, which seriously affects the results of companies that offer this service. There are 28 insurance companies and 1 reinsurance company operating in the country.

Vehicle insurance is the second most sought after branch in the country with 18.7% of the market, behind collective life insurance which has 28.8%. Firefighters are third with a 12.6% share.

He confirmed that due to these accident indicators due to robberies, the market suffers a technical loss of $10 million by July 2023, but in the overall net result it is higher.

Salas attributed this high rate of accidents and technical loss to several factors, the strongest of which is the increase in crime and theft of cars and their parts. In the case of stolen vehicles, the leader cited figures from the Prosecutor’s Office which show that vehicle thefts have increased from 5,653 units in 2019 to 11,372 in 2022, which clearly shows the exponential increase in risk affecting the service’s results. Meanwhile, 5,025 stolen cars were reported until June last year.

At the end of 2022, the vehicle insurance branch represented $375.4 million in sales, while in July 2023, the accumulated sales in this branch reached $226.5 million and is equivalent to 17.8% of the total market.

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Regarding the statistics, Salas justified the behavior of the companies by explaining that it is not a trade union action, but is aimed at the responsibility that these insurance companies have towards their clients and maintaining the solvency standards required by the regulations that regulate the sector. .

“Some insurers have carried out the necessary technical studies to find the balance that the service must have, the conclusions of which are reflected in certain new policies, based on the new size of the risk that is assumed, each independently and depending on their experience and situation,” explained Salas, who has assured that the risk has definitely changed to levels never seen before in the country, and therefore a review of the situation is necessary so that the insurance conditions reflect this new reality.

For example, one of these press releases from the Zurich company details 11 models that correspond to the most commercial brands on the market. “It is reported that they do not insure vehicles that circulate in the provinces of Los Ríos, Esmeraldas, Santo Domingo and the city of Machala,” said a statement in which the company ensures that the adjustments are caused by the increase in the accident rate of these vehicles.

These models are:

Another company, Mapfre, reported: “As of the current date, the company will temporarily stop subscribing and renewing the following vehicle makes and models.” The statement detailed six models.

It also lists seven other models that will be forced to engage a company-approved satellite tracking service.

The models, in all their versions, excluded by Mapfre are:

Meanwhile, Seguros Constitución has listed 19 brands in all its models and versions that they have not insured since last August 1, also due to high accident rates. In addition, they do not insure vehicles weighing more than 3.5 tons, they stated.

These are the models, in all their versions, detailed by Seguros Constitución:

However, Salas clarified that it is not that the market as a whole has stopped taking responsibility for the vehicle line, but some companies have adjusted their takeover policies, which will be revised over time and a new balance is expected to be found soon.

He assured that he knows that in ongoing contracts, their terms are respected until they expire. “Renewals or new contracts are subject to each company’s technical policies, as they always have been, and customers will be able to analyze, together with their insurance advisor, market options to make their best decision,” Salas said.

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However, Salas indicated that the insurance sector believes that the problem cannot be solved solely by the actions of insurers, but that it must arise from the various actions necessary to control the risk of theft that has imbalanced the segment and that must compromise other actors, within them, the bodies that deal with the safety of citizens, as well as other sectors related to the automotive field.

“We have already discussed and collaborated with some of them on strategies and actions that achieve this goal, and we will continue to make these efforts. We are concerned about the situation and we hope that with the participation of all actors we can return to more stable and historical indicators, which would be our greatest wish,” concluded the leader.