Insurance in Mexico: Moody’s Sees More Policy Uptake in 2026 Despite Higher Premiums and Healthcare Pressure
Mexico’s insurance industry is shaping up for a more dynamic 2026, even as premiums rise in key lines such as auto and health insurance. An analysis by Moody’s Local estimates the sector could accelerate to 9.6% growth in 2026, up from an estimated 7.6% in 2025, supported by stronger traction in economic activity and continued gains in formal employment. The ratings firm’s view is that, even with rate adjustments and cost pressures, demand for financial protection will keep expanding as households and businesses increasingly treat insurance as a standard part of their planning.
The main argument behind the positive outlook is macroeconomic: with moderate GDP growth and a larger formal labor base, the pool of people with purchasing power—and access to job-linked products—expands. In particular, Moody’s expects the life segment to be one of the winners, with projected growth of 7.8% in 2026 (up from 5.8% in 2025), driven by higher uptake tied to employee benefits, lending, and asset protection. At the same time, the firm also expects stronger performance in surety bonds, boosted by construction and infrastructure projects—an area that often picks up when contract execution and supply chains ramp up.
Behind the higher cost of certain policies is a mix of regulatory and cost factors. In 2025, a major tax change for insurers took effect: the deduction of VAT paid on claims was limited, raising the effective cost of servicing claims and forcing insurers to treat that VAT as part of the underwriting loss. This change mainly affects auto, health (major medical), and property/casualty coverages (such as earthquakes, fires, and floods), and has led to rate increases that in many cases fall in the 6% to 10% range, depending on the risk profile and claims experience of each book of business.
Moody’s Local argues that, in solvency terms, the sector has sufficient “cushions” to absorb the regulatory hit; however, it acknowledges that profitability at some companies could remain under pressure in 2026 and that the repricing will show up gradually through renewals. In the market, the price adjustment is not uniform: each insurer recalibrates premiums based on actuarial variables—claim frequency and severity, repair costs, medical-service inflation, and reserves—so increases vary by age, location, deductibles, and insured amount.
In health insurance, the debate goes beyond taxes. Industry intermediaries point to a structural squeeze: steadily rising care costs, growing demand for private services, and higher hospital and supply expenses. So-called “medical inflation” typically runs above headline inflation, undermining the viability of stable premiums; in practice, that translates into double-digit renewal increases and steeper adjustments for older adults. For households, the impact is immediate: higher fixed monthly or annual costs, and a tougher choice between keeping broad coverage, raising deductibles, or reducing coverage limits.
Auto insurance, for its part, faces different pressures. On top of tax-related costs are parts prices, theft, and accident claims, although the market has shown some offsets: more competition across models and a growing supply of imported vehicles—including those from Asia—has partially contained the price of some policies. Even so, Moody’s expects auto policy uptake to grow around 11.5% in 2026, after 9.5% the prior year, reflecting deeper insurance penetration and a growing vehicle fleet, particularly in metro areas.
Interest rates are also part of the backdrop. With Banxico (Mexico’s central bank) in a monetary normalization phase after the inflation episode of recent years, borrowing costs and consumption trends affect demand for insurance tied to financing (auto, mortgage-related, and life). If rates continue to come down in an orderly way, credit could regain momentum and, with it, boost related insurance products. If, on the other hand, inflation pressures reemerge or the external environment deteriorates, household spending could shift toward essentials, weighing on the purchase of voluntary coverage.
Overall, 2026 is shaping up as a year of expansion for the insurance sector, but with consumers more price-sensitive and insurers forced to sharpen their risk models. The combination of formal employment, stronger activity in project execution, and a gradually more prevention-oriented financial culture can sustain growth; the challenge will be ensuring that rising costs—especially in healthcare—do not slow penetration, and that tax and cost adjustments translate into more efficient and transparent products for end users.
