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  • Writer's pictureMarco Novoa

The Constitutional Court and its impact on the functioning of the SCTR

How is the Peruvian insurance market?

At the Latin American level, the Peruvian insurance market is one of the markets with the lowest penetration in relation to GDP (2%). Of the total value of premiums paid in the region, Peru only represents 3%. In fact, this is directly reflected in the rather limited offer of insurance products, mainly concentrated in four insurers.

Of course, this allows insurers to select the risks they want to cover or not, leaving few options for insurers. But the problem is further exacerbated if we consider that there are insurances that are mandatory by law, such as Complementary Risk Work Insurance (SCTR) or Law Life Insurance. Specifically in relation to the SCTR, out of 16 insurance companies registered with the Superintendency of Banking and Insurance, only 5 of them market this type of insurance.

We understand that within the insurance market there has been a lot of talk about the exit of some insurers from marketing SCTR. Could you tell us a bit more about this?

Indeed, and it is a huge concern for the sector. A few months ago, one of the insurance companies with the largest share of SCTR in our country practically decided to withdraw from the SCTR Pensión business, reducing the number of insurers that market this insurance to four and limiting -even more- the offers of a mandatory product for employers who carry out high-risk activities. To make the situation more dramatic, of these four insurers, one of them only quotes SCTR Pension only to the extent that the employer (SCTR contracting party) has placed its patrimonial risks in the same insurer, and another of the insurers has maintained its portfolio of SCTR Pensión, but is not willing to quote new requests for this insurance. We see it in our day to day when our clients ask us for SCTR and the insurance companies do not even want to quote. We have to juggle to find this product for our clients, who must take out this insurance.

What has led insurers to want to stop offering SCTR?

Since the creation of this insurance in 1998, the Constitutional Court (TC) has dedicated itself to issuing binding precedents with protectionist criteria in favor of workers, disrupting the proper functioning of the SCTR. This, evidently, has led insurance companies to make inaccurate risk calculations, incurring cost overruns and generating destabilization, which means that they receive returns that no longer support the investment of the SCTR. In business terms, it seems that it is no longer so profitable for insurers to market the SCTR, especially in pension coverage.

Find out more fascinating details in our full interview by clicking the link below. (Pages 20-24)

Marco Novoa Ana Paula Novoa

General Manager General Risk Manager


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