Mexico's insurance sector grows but faces profit squeeze in 2025

Mexico’s insurance industry is facing a mix of growth and financial pressure in 2025. While the health insurance sector continues to expand, rising medical costs and new tax rules are squeezing profits. Recent security incidents and higher claim payouts have added to the challenges for insurers this year. The health insurance segment remains a bright spot for the industry. By the end of 2025, the number of people covered under major medical expense policies is expected to reach 14.5 million. In 2024 alone, insurers handled over 1.3 million claims in this category.

However, financial strains are growing. A fiscal reform in 2025 removed VAT deductibility, directly cutting into insurers’ profitability. The Mexican Association of Insurance Institutions (AMIS) warns that the full impact will become clearer as policies renew later in the year. Sector profits have already dropped by 12.7% in 2025, while the loss ratio climbed from 45.9% to 47.3% in the first quarter. Auto insurance has also seen increased activity. A security crisis in Sinaloa late last year resulted in 277 damaged vehicles, pushing up claims. Despite this, vehicle theft—especially of private cars—has steadily declined since before the pandemic. Meanwhile, total payouts for accidents and illnesses across the sector surpassed 145 billion pesos in 2025, reflecting nearly 19% annual growth.

The Mexican insurance market is balancing expansion in health coverage with tighter profit margins. Higher claim payouts, tax changes, and regional security issues are reshaping the industry’s financial landscape. Insurers will need to adapt as these pressures unfold through the rest of 2025.